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Capital Chatter: State institutions could go up for sale

PERS task force has interesting ideas, but little institutional knowledge.

Should state government raid its workers' compensation fund to pay for PERS? How about selling off a state university for the same purpose?

Those are among the ideas for achieving Gov. Kate Brown's pledge to find $5 billion for propping up the Oregon Public Employees Retirement System. PERS has a massive unfunded actuarial liability. That is, its reserves are insufficient to pay for the projected costs of state-, school- and local government-employee pensions.

Kudos to Brown's seven-member task force for being willing to look under every government rock for pension dollars.

But the task force suffers from a lack of institutional knowledge. In1982, the Legislature raided Oregon's semi-independent State Accident Insurance Fund, taking $71 million from the workers' compensation carrier to prop up the state general fund during a recession.

That bipartisan raid was conducted with the blessing of then-Attorney General Dave Frohnmayer, one of the smartest guys in state government. Six years and many lawyer bills later, the Oregon Supreme Court ruled that the Legislature's action was unconstitutional. See the case of Eckles v. State of Oregon.

If that sounds similar to court decisions on PERS, you're thinking along the same lines as I. Meanwhile, I wonder what would happen if the state tried a similar raid with another public corporation, Oregon Health & Science University, which has multi-millions in reserve.

As for selling a public university, a number of years ago Oregon's oldest public college was in such sad shape that politicians talked of converting the Monmouth campus to a state prison. Today that school, Western Oregon University, is the financially strongest and arguably the academically most successful of the state's regional universities.

• Time to dump the liquor business? The Oregon Liquor Control Commission also is in the PERS task force's sights. As a regulatory agency for alcohol and marijuana, officials say it's doing fine. But as a sales and marketing agency for alcohol, it's outdated and inefficient.

The OLCC also faces a similar quandary to that of the Oregon Lottery: the inconsistency of both promoting drinking and not wanting to encourage over-drinking. Legislators rail against problem gambling and problem drinking, but the Legislature is addicted to spending the resulting revenue.

To raise money for PERS, one idea is to add a surcharge — such as 1, 5 or 10 percent — on each bottle of alcohol. The alcohol lobby at the Oregon Capitol has thwarted past proposals to boost taxes.

Other ideas include partially or fully privatizing the OLCC. However, it was reassuring on Monday to hear task force chair Don Blair not that Washington has struggled in vastly expanding liquor sales to private retailers.

• Blue ribbon vs. horse sense: The task force members are clearly bright — maybe brilliant — financial executives. It's clear that several are working hard on this project.

However, the task force is Portland- and Salem-centric, or it seems. The Governor's Office has not responded to several requests to say where the members live. Such silence is inexplicable.

Meanwhile, the task force appears to possess the same flaw as many blue-ribbon panels: There's no curmudgeon, no one with old-fashioned horse sense, who will improve the discussions by questioning assumptions. To avoid groupthink, every public panel needs one curmudgeon.

• Not so bipartisan: House Speaker Tina Kotek, a Portland Democrat, ran afoul of the Republican minority as the 2017 Legislature came to end. Republicans felt she shut down Republicans' attempts to raise legitimate issues during floor debates, especially on health care.

She has irritated them again by not consulting with House Republican Leader Mike McLane of Powell Butte about who she was appointing to a committee dealing with a potential January referendum on that health care funding.

Preston Mann of the House Republican Office issued this statement: "The Rules of the House require the Speaker to 'consult' in "good faith" with caucus leaders prior to making committee appointments. An 'FYI" text message between staff members, which was the only notice our office received prior to these appointments, clearly does not meet that standard. There is no disputing that Speaker Kotek violated the letter and spirit of House Rule 8.05 (3)."

Dick Hughes has been covering the state's political scene since 1976. Contact him at This email address is being protected from spambots. You need JavaScript enabled to view it. or follow him at Facebook.com/Hughesisms, Twitter@DickHughes or YouTube.com/c/DickHughes.