As city staff worked in recent months to craft a way out of the worst budget year in recent memory, events in Salem might have accomplished more to shore-up city finances than any pool closure or reduction in police officers.
Thank the city's current and future retirees.
The budget proposed by Mayor Charlie Hales on Tuesday includes $3.5 million in general fund savings the city thinks it might see as a result of expected reforms to the Public Employee Retirement System. And that's a conservative estimate. The City Budget Office suspects overall savings from the current PERS reform plan could reach up to $12 million, once general fund savings are added to savings in bureaus not reliant on the fund.
"It's a very rough estimate," Budget Office Director Andrew Scott tells the Mercury. "There's absolutely risk."
PERS reforms in Senate Bill 822, which cleared the Oregon House on April 24, would reduce statewide pension costs for public employees by more than $800 million in the next two years— a mix of cuts to the system and postponed payments. The bulk of city employees are covered under the PERS system. Gov. John Kitzhaber is expected to sign the bill.
Exactly how much the city will save on expected payments has yet to be hammered out, Scott says. But the $3.5 million assumed in Hales' budget was conservative, he noted. The city thinks it could actually see $4.3 million in general fund savings alone.
"Until the governor does sign 822, which seems like a safe assumption, we picked up roughly 80 percent of those savings," Scott said.
And if the legislature goes deeper on reforms, as many Republicans would like?
"To the extent the legislature goes further in PERS reform," Scott says, "that could mean additional savings."
It's worth noting city workers are already expected to shoulder a burden in closing the budget gap. Hales' proposed budget includes 182.5 in possible job cuts (some through attrition), and cost-of-living increases would be cut in half for some employees and delayed for others.
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