Is TriMet Better Off Than Greece?

Syndicated financial writer Malcolm Berko recently advised a small investor to stay away from Greek bonds or securities. He wrote, “Greece has morphed into a bureaucratic five-star welfare state; but in reality, Greece is a one-star economy. The pensions and entitlements consume 52 percent of government income.”

Well, TriMet’s most recent audited financial statement was released in September, and last year TriMet’s “income” – money earned from customers buying rides, advertising, or services – totaled $153.4 million. The cost of fringe benefits such as pensions and health insurance equaled $166.8 million, or 109% of income.

But the actual problem at TriMet is far worse, because most of the obligations for pensions and other benefits don’t show up as current-year expenses. They appear in financial statements as accrued liabilities that have to be paid off sometime in the future.

Taking into account all liabilities for fringe benefits, TriMet has $711 million in health care obligations, $18 million in pension liabilities for management, and $159 million in pension costs for the union. This sums to $888 million in actuarial accrued unfunded liabilities, or 579% of operating income.

Greece is an international financial disaster; but compared with TriMet, it’s a model of fiscal restraint.

Cascade Report Exposes $2.6 Billion in Unfunded Liabilities

Cascade Policy Institute has released a new report showing that Oregon public employers have more than $2.6 billion in unfunded actuarially accrued liabilities associated with non-pension benefits promised to current and future retirees. Referred to as “Other Post-Employment Benefits,” or OPEB, these liabilities include various forms of deferred compensation.

The Governmental Accounting Standards Board mandates that public employers clearly state financial obligations for OPEB in their comprehensive annual financial reports. However, employers are not required to set up trust funds to pay for these promises. As a result, the Cascade review of 125 financial reports of state, regional, and local governments shows that most employers have no money set aside and are paying for OPEB obligations out of annual operating revenues. This cannibalizes funds needed for actual services.

The Cascade paper is a call to action for the legislature to impose some form of fiscal discipline on public employers by requiring them to make annual contributions to OPEB trust funds. Legislation to accomplish this has been considered in past sessions but never approved. The Cascade report can be viewed at cascadepolicy.org.

Unfunded Liabilities: Oregon’s Hidden Debt

By Michael Bastasch

Congress is still debating raising the federal debt ceiling. This would allow the U.S. government to continue to borrow and to add to the already staggering $14.3 trillion in debt. However, the feds aren’t the only ones with debt problems. State and local debt is rising, including $3.1 trillion in unfunded liabilities.

Oregon’s debt is piling up as the state government continues to make future promises it won’t be able to fulfill. A study by the National Center for Policy Analysis found that Oregon’s unfunded pension liabilities totaled $47.5 billion, and its unfunded Other Post-Employment Benefits (OPEB) liabilities (mostly for retiree health insurance) were $765 million, totaling about 30% of Oregon’s GDP in 2008.

The real situation is much worse because the study failed to recognize the vastly unfunded OPEB liabilities of other Oregon government entities. A report by Oregon Capitol News showed that the largest 100 government entities in Oregon had $2.8 billion in unfunded OPEB liabilities. Including unfunded liabilities from all 1,700 government entities no doubt would reveal a much grimmer picture.

Future taxation will be determined by what government spends now and has promised to spend down the road. Taxes must increase if government debt isn’t decreased. All levels of government must reduce the debt burden on citizens to avoid severe fiscal distress and high taxes down the road.


Michael Bastasch is a research associate at Cascade Policy Institute, Oregon’s free market public policy research organization.

Testimony before the CRC Independent Review Committee

John A. Charles, Jr.
Cascade Commentary

Testimony before the CRC Independent Review Committee

By John Charles

Download Full Testimony Here

June 17, 2010

I wish to make two basic points tonight, related to: (1) tolling; and (2) TriMet’s financial viability

Tolling, Variable Rates, and the Portland Highway Network

For the past several years, the CRC management team has considered tolling primarily as a means of partially financing the new bridge. While there has been some modest consideration of variable toll rates, project managers have never defined the purpose of those rates (in terms of anticipated driver benefits), nor have they analyzed variable pricing within the context of the broader Portland highway network.

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The Tax Dollar Addiction

Todd Wynn
QuickPoint!

Click the play button to hear the audio commentary

by Todd Wynn

The Tax Dollar Addiction

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Drug addiction is tough to deal with, both for the addict and for his or her friends and family. Those around drug addicts lend or give them money and often are surprised when they use it to buy more drugs. It is important for those who care for an addict to show support, yet not enable him to make more bad decisions. This is how we need to treat our legislators.

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Testimony before the Multnomah County Tax Supervising and Conservation Commission Regarding the TriMet Proposed FY 11 Budget

John A. Charles, Jr.
Cascade Commentary

by John A. Charles, Jr.

Testimony before the Multnomah County Tax Supervising and Conservation Commission

Regarding the TriMet Proposed FY 11 Budget

May 25, 2010

TriMet asserts that the proposed FY 11 budget adheres to principles of good budgeting and financial planning because “revenues and expenditures are in balance” and the budget“incorporates a long term perspective” (page 2).

This is disingenuous. The only “long term perspective” being offered by TriMet is the continued practice of pushing debt payments off to the future. The problem is that eventually the future arrives, and someone has to pay. TriMet is creating a regressive, intergenerational burden by hiding more than $1.2 billion in expenses.

TriMet must confront the two major cost drivers that are out of control: (1) employee fringe benefits; and (2) rail construction projects.

Download the Full Testimony

John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.