PERS-ecution
Here's a story that would be funny if it weren't so sad: A guy who knows something about money recently moved to Portland and discovered the city government's $3.8 billion (with a "b") unfunded pension liability to police and firefighters. Zero percent funded, it all gets paid out of current property taxes. The financial expert is "aghast."
The fact that pay-as-you-go persists in Portland stunned Kevin Machiz when he moved here in 2019. Machiz is a chartered financial analyst and, to a finance guy like him, discovering a pay-as-you-go pension system that’s still in action is like a car nut seeing a Model T bouncing down Burnside during the morning commute.
Welcome to Portland, dude! I've been pointing that out for around a deacde and a half. You'll get used to it.
And that hideous IOU is just for the cops and firefighters hired before 2007. For those who came on board after that, the city pays the state public employee pension system, PERS, to provide retrirement income. For all city employees, the city's unfunded PERS liability as of a year or so ago was reported (page 22) to be roughly $673 million.
And the PERS part has gotten worse since then. At a recent meeting, the PERS masters of the universe let it be known that instead of earning their target of 6.9 percent return on investment last year, they actually managed to lose more than 1.5 percent (see page 17 here), tacking another $8.4 billion or so onto the unfunded liability statewide. By my amateur math, it's approaching $22 billion.
I don't know exactly what last year's PERS losses did to Portland's $673 million unfunded PERS number. I suspect it pushes it over a billion.
When you drive around gazing in horror at the failed government of Portland, keep these numbers in mind. All of that dough has got to be paid at some point, and when it comes due, everything else has to wait. We're feeling that now. It's not going to get better.
When my untrained eye sees the inevitable collapse. I wonder why the bureaucrats in charge keep kicking the can down the road
ReplyDeleteLike most things, the pension thing is a tomorrow problem. As long as it's always today, there's no problem. Meanwhile, those in charge have a trip to Portugal for which to pack. They'll get back to you in a week or two. Maybe. Depends on whether they can stretch their PTO through Thanksgiving.
DeleteMaybe the "City that has Retired" will help trim down the "City that Works You Over". Silver linings.
ReplyDelete"It all gets paid out of current property taxes" is doing a lot of heavy lifting. That portion of Police and Fire retirement is not subject to Oregon's property tax limitations. That means that our property can - and must - rise to fund whatever the current year's liabilities are.
ReplyDeleteBut I'm guessing they can't do that until the pension obligations overtake property tax revenues. Long before that happens, the City will have laid off thousands of staff. In the end it might just be a skeleton crew collecting taxes for pension obligations. Fitting end.
DeleteWrong. It is subject to the $10 per $1000 govt section. But most are far away from compression.
DeleteSo the solution is …? Seems like they all boil down to A or B:
ReplyDeleteA) Raise property taxes today to to build up funds to pay the accrued liability
B) Default on the obligation (declare municipal bankruptcy and start screwing people over)
There’s a smart guy named Chuck Marohn who says that we’re all Detroit — they were just first.
Municipal Bankruptcy requires a state law to enable it. Oregon has none. What are the chances that the public employee unions would allow that to pass? HA! I (a moderate Democrat) moved out of the City that Camps in 1993, for these reasons. Clackastan may be a political battleground, but at least the taxes are tolerable, in most places.
DeleteI guess that's why they don't teach real math anymore. 0 + 0 = fully funded. But to be fair, it's hard to make investment decisions when the markets are rigged and they just keep printing money out of thin air.
ReplyDeleteA while back I worked as a seasonal park ranger in Portland. The man in charge was a retired PPB officer. He was an interested and interesting man. Portland born and bred he had served in the USMC, w/the Peace Corp (tour of duty in Afghan), and the USCG. He’d made strong contributions wherever her served. I was most impressed with his contribution to nautical charting.
ReplyDeleteHe hand picked two outstanding young men to be his permanent hires. They served as trainers for seasonals and were simply astonishingly professional. For example, one day a child was lost in Forest Park. By the time search and rescue and thePPB and everyone else arrived these two had improvised a professional-level plan for searching, communicating, and reporting. The pros operated off what these two outstanding young guys improvised. Success was immediate. The affirmative action hire who was head of the Park Bureau was finally able to cease running around with his hair on fire and collapse into neurotic incompetence.
Anyhow, the bitter enmity directed towards these white males concluded with the young guys not rehired and the ranger head leaving.
In return the city got unionized full-time rangers, and sporadically competent misguidance inn this area of that bureau. It was breath taking how inbred, arrogant, and generally fkked up was that bureau.
One of my favorite guys on that job was a retired fireman who’d worked pilot air rescue in Vietnam. Brother, did that guy have a pension.
It’s sad when a goal of competence is replaced with social agendas.
ReplyDelete