Oregon is currently struggling with a $22 billion pension deficit. This is a problem that has been growing for years, and just last month, Gov. Kate Brown announced a plan to sell $5 billion worth of public assets to aid the fight against the state’s deficit.
According to Brown, everything could be sold, for the right price, except for state forests, parks and prisons.
Much of the pension deficit comes from the public employee retirement system (PERS), a system that will continue to clobber Oregon and its budget for the next several years even if Brown is successful in her current venture. The state has promised public worker retirees money that the state itself does not have.
Brown may also sell up to four state agencies, agencies that oversee liquor and marijuana sales to keno machines and mass transit. This method is very different from Democrats’ typical approach of focusing on new tax revenue to pay off deficits.
Other states are considering taking similar actions to improve their own budget deficits.
The difficulty of privatizing some agencies is the backlash from unions. Several states, including New Jersey and Massachusetts, have attempted to privatize parts of their transit systems, but have received intense opposition from labor unions.
Allen Alley, a former Republican candidate for governor and treasurer of Oregon, has said that Brown’s plans will not end the severe pension deficit that Oregon is suffering from due to the fact that Oregon governments still guarantee pensioner’s future payouts rather than offering a 401k-type plan that shifts risks to workers.
Brown’s plan also includes the creation of a PERS expert panel to focus on this sale of state holdings as well as the hiring of additional treasury staff to increase in-house investing in an attempt to save money. Another part of Brown’s plan includes having employees contribute a larger share of the deposits to their pension account.