When there is a mutually bargained for exchange for value, and one side is unable to deliver the promised value, in legal terms it’s called a failure of consideration.
What should be done if the Oregon Supreme Court overturns the PERS reforms that were part of the 2013 Legislaure’s “Grand Bargain” ?
In 2013, the State faced a budget crisis. State retirement costs were taking an ever increasing part of State and local budgets and Oregon education spending was losing ground and we continued to dwell in the bottom third of all states in per student spending. The solution was the Grand Bargain. The key elements of the deal were:
PERS changes. Reduce COLA’s, remove future legislators from coverage. (and other fixes)
Taxes: increase taxes on higher income Oregonians and eliminate the special medical tax deduction for higher income seniors. Increase cigarette taxes. Decrease taxes for pass through (S-Corp and LLC) business owners
Eliminate the power of local entities to regulate GMO’s
One time spending bump for schools
The GMO bill was a pay off for someone and not a key to the bargain. The key bargain- or exchange of consideration – between the Democrats and the Republicans was the trade off between PERS changes and taxes. And the key result was the school spending bump.
Immediately after the Grand Bargain was passed, the PERS changes were challenged in court. The challenge was fast tracked to the Oregon Supreme Court. All briefing was to be complete by early September and arguments are to be heard in October 2014. Unfortunately, the Oregon Supreme Court will not be able to issue an opinion before the November election.
But what if the Courts strike some or all of the PERS changes? If it does, the Legislature will have to address the huge gap the Court will have blown in the budget. (more…)