Ore. Senate approves Democrats' pension cuts

SALEM, Ore. (AP) -- The Oregon state Senate on Thursday approved a Democratic plan to cut pension benefits for retired government workers, voting along party lines over vehement objections from Republicans who said the plan was timid and anemic.

Democrats say the measure would allow more spending on education by reducing taxpayer contributions to the Public Employees Retirement System.

Business groups, Republican lawmakers, school board members and others said the Democratic plan falls far short of achieving the savings needed to stabilize the pension system's rising cost to taxpayers. Retirees and public-employee unions also objected passionately, saying the Legislature is reneging on a promise of retirement benefits in exchange for a lifetime of work for a government agency.

The Democrats' bill doesn't solve the problem of rising pension costs, leaving funding gaps in important programs, said Republican Sen. Tim Knopp of Bend.

"We still have cuts to education. We still cannot fund mental health. We still cannot give everything we need to give to our senior service programs."

The measure would save state and local governments about $460 million over the next two years, mostly by reducing cost-of-living increases for retirees earning more than $20,000 a year. Democratic Gov. John Kitzhaber proposed $860 million in cuts, and Republicans are pushing for more than $1 billion.

Several Senate Democrats have said the pension bill approved Thursday is only the beginning and more cuts could come down the road. Their position sets up a conflict with the House, where Speaker Tina Kotek, D-Portland, has said she's unwilling to cut any deeper.

In addition to their proposed cuts, Democrats want the pension system to delay $350 million worth of taxpayer contributions into future budget cycles.

Severe investment losses during the Great Recession erased 27 percent of the pension fund in 2008, requiring steep increases in taxpayer contributions to make up the difference and limiting money available for state and local government services.

Democrats acknowledged that they were asking a lot of retirees.

"We're asking them to give some of their hard-earned retirement back in order to make a substantial reinvestment in our schools and our future," said Sen. Arnie Roblan, D-Coos Bay, a retired public-school principal.

The bill goes next to the state House, which is also controlled by Democrats and could vote as soon as next week. Kitzhaber has said he'll sign it.

The cuts are almost certain to be challenged to the state Supreme Court, and even the bill's proponents say it's anyone's guess whether the justices will uphold the cuts.