In a time of burgeoning state revenues, Oregon lawmakers aren’t doing a lot to address the gaping deficit in the state’s public pension system. But among the baby steps they’ve taken is to tap one specific demographic to narrow the funding gap by a sliver.

Dead people. Specifically, ultra-rich dead people.

In a new revenue forecast issued Wednesday, state economists said estate tax collections are running considerably above expectations. It’s not that more deceased people are getting hit by Oregon’s death tax, as Republicans like to call it. That only kicks in on estates valued at more than $1 million, and the number of estates that exceed that threshold has been relatively steady.

Rather, the growth in collections reflects the increasing size of a very few large estates, which have grown in concert with stock prices and home values, economists said.

In other words, the really rich keep getting richer. No surprise, given consistent growth in income and wealth gaps in recent decades. But here’s where that benefits public employees:

One step lawmakers took in 2018 to head off the massive pension contribution increases that public employers were facing was to dedicate certain categories of windfall tax collections to the Public Employees Retirement System when they come in above the past five biennia’s average trend line. That included the estate tax.

That requirement looks like it will be triggered this year by above average growth in estate tax collections, and the excess collections would go to PERS. If the forecast holds, state economists expect $17.6 million will be transferred next biennium into a fund designed to hold down pension contribution increases for schools.

It’s not a lot, a drop in the proverbial bucket given the system’s $24 billion funding deficit. The impact on required contributions from public employers may be almost imperceptible. But there it is. Soak the rich, as they say.

But not so fast. This brings up another, mostly Republican-backed bill, that landed in this year’s short session. Senate Bill 1560 would bump up the size of exemptions from Oregon’s estate tax. That’s long been a red-meat issue for Republicans around the country, and Oregon’s estate tax is among the most burdensome of all.

As it stands, the first $1 million of any Oregon resident’s estate is shielded from the estate tax (it’s $10 million at the federal level). But if SB 1560 passes, the state exemption would jump to $1.5 million on estates less than $2.5 million; $1.2 million on estate less than $3.5 million; and progressively smaller exemptions on larger estates until the exemption is phased out on estates higher than $6.5 million. The bill would also lower the tax rates on the portion of estates that are taxable.

Moreover, it just might ensure this pension transfer business doesn’t happen in the future. The bill gets its first hearing Thursday in the Senate Committee on Finance and Revenue.

- Ted Sickinger; 503-221-8505; @tedsickinger