EDITORIAL: Benefit costs are key to budget puzzle

Mail Tribune (Medford, OR)

April 30--Lawmakers in Salem are getting serious about tackling the looming shortfall in the state budget, which must be balanced this session. To that end, legislative leaders and Gov. Kate Brown are talking about stemming the increase in benefit costs for public employees along with changes to the Public Employee Retirement System, which faces a $22 billion unfunded liability. Lawmakers must resist pressure from state employee unions, who will fight any limits on compensation.

On Wednesday, legislative leaders announced the creation of a bipartisan tax reform committee to propose changes in taxing corporate income. The goal is a business tax plan that could go to voters as early as this fall.

That's not a promising development, because of the resounding defeat of Ballot Measure 97 last fall, which would have increased taxes on the largest corporations doing business in Oregon. Some business interests already are gearing up to fight any future tax proposal, and others have made it clear they will consider changes to corporate taxes only if the state first addresses the constant increase in spending.

Public employee unions, which backed Measure 97 and want corporations to pay more taxes, also support the majority Democrats in the Legislature. But halting the constant increase in employee compensation costs is key to solving the budget problem.

The Oregon Business Plan coalition, a group of businesses and organizations working on public policy issues, points out that Oregon spends more than most other states on public employee benefits, especially health insurance.

Teachers and classified school employees, for instance, receive salaries that rank 22nd nationwide -- a little above the middle of the pack -- but their benefits are the fifth highest in the country.

State agency employees have the sixth highest total health insurance premiums among all states -- and the state pays far more of it on their behalf. Oregon state employees' contribution to their own health insurance ranks 45th lowest. The state's contribution to those premiums is 50 percent greater than the national average.

These costs continue to rise as premiums climb.

Limiting the state's contribution to public employees' health insurance to the national average would go a long way toward controlling the rise in state spending.

That won't sit well with public employees or their unions, but private sector employees have faced that situation for years. When costs go up for everyone, it's only fair that everyone shares the burden.

No one is suggesting that public employees' salaries should be cut. But continuing to provide some of the richest benefit packages in the country is simply not sustainable.

Oregon voters might be persuaded to support higher taxes on corporations, but not if the Legislature fails to get a handle on spending. The same goes for business leaders.

The Democrats who control the Legislature must stand up to their union supporters and face the reality that the state must rein in benefit costs before it asks for more revenue.

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