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Governor Brown: Cut the fat while pursuing other sources of revenue

Governor Brown
The Oregonian photo


Governor Kate Brown Announces Plans to Reduce the Overhead Costs of State Government

(Salem, OR) — Governor Kate Brown today announced plans to address Public Employees Retirement System (PERS) costs, state employee compensation bargaining, and debt collection. With the cost containment measures announced last week, these actions will reduce the overhead costs of state government and increase the efficiency of essential services.

“The state’s budget deficit threatens to defund core services to Oregonians—particularly our children, seniors, and our most vulnerable. This is unacceptable,” said Governor Brown. “The actions I’ve taken today will help cut state government’s overhead costs for the next state budget and beyond. I want to be clear: spending every dollar wisely is job one.

“However, to be the state we want to be – especially in our education system and rural areas – simply tightening our belt will not be enough. We need to manage our expenses, but we also need stable and adequate revenue for essential services.

“In the coming weeks I will be visiting communities and boardrooms across the state to show that state government can be a responsible steward of the revenue it receives. In return, I am hoping to build consensus around solutions that restore fairness and balance to our tax system.”

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Details on today’s actions:

PERS Task Force
The unfunded actuarial liability is the main cost driver behind increasing employer rates, but those costs are legacy costs associated with retirees that have accumulated because of the actions of past legislatures and PERS board decisions. Benefits changes and cost sharing won’t address that portion of PERS costs. The state must reduce the PERS liability to increase stability to the system.

The Department of Administrative Services will appoint a task force to review and propose options for making $5 billion in payments toward the PERS unfunded actuarial liability. The group will examine state assets as well as the assets of other public employers that could be sold, bonded against or otherwise leveraged. Their report is due November 1, 2017.

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Bargaining – Executive Order 17-08 – signed today
Ensures the state is hiring qualified employees at competitive salaries, and ensure that state contracts are negotiated on a total cost basis so we live within our means.

Uncollected Debt Executive Order – to be signed next week
As of June 30, 2016, there was $3.3 billion in uncollected state debt. Of that amount, about $600-$800 million is owed to the general fund. About 95 percent of the outstanding debt owed to the general fund is related to unpaid taxes.

To collect this debt efficiently, Senate Bill 89 streamlines our debt collection process and centralizes it at the Department of Revenue. In an executive order, Governor Brown is directing all state agencies to:
By June 1, 2017, report to the state’s Chief Operating Officer with their most recent uncollected debt numbers and what they think is collectable.
Require all agencies to determine if a contractor has debt with the state before issuing or renewing state contracts.

Ask the Department of Revenue to evaluate creating a transparency website that lists legally appropriate information about debtors.

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