Opinion ID: 1286488
Heading Depth: 2
Heading Rank: 3

Heading: Local Defendants' Challenge to the Validity of SB 656 and HB 3349.

Text: In Hughes, this court did not fashion a remedy for the breach of contract that had resulted from the legislature's decision to subject to income taxation PERS retirement benefits accrued or accruing before the effective date of SB 656. 314 Or. at 33 n. 36, 838 P.2d 1018. As we have discussed, in 1991, the legislature enacted SB 656; and, in 1995, the legislature passed HB 3349. Both of those acts increased the retirement benefits that plaintiffs would receive. The increases enacted by the legislature in 1991 were not based on actual or even potential tax liability. That is to say, there is no mathematical correlation between taxes and the benefits created in 1991. Ragsdale, 321 Or. at 221, 895 P.2d 1348. Yet, it is apparent from the context of that act that the legislature intended for those increased benefits to compensate PERS retirees for the loss of the tax exemption. See SB 656, § 12(1) (the increased benefits [provided]    by    this Act    shall not be paid in any tax year in which the retirement benefits payable under [PERS] are exempt from Oregon personal income taxation). The same issue motivated the 1995 legislature. See HB 3349, § 2(1) (stating that the increases provided in that act are intended to be in compensation for damages suffered as a result of the breach of contract discussed by this court in Hughes ). [15] Plaintiffs and the state seek a declaration from this court as to the validity of the 1991 and 1995 legislative enactments. Local defendants' challenges to the validity of the acts are based on an alleged statutory contract between the state and local defendants. As held above, local defendants are not entitled to rely on such a statutory contract. Accordingly, local defendants' arguments as to the invalidity of SB 656 and HB 3349 are not well taken. Stovall plaintiffs concede that implementation of HB 3349 would constitute a complete remedy to that plaintiff class. Chess plaintiffs do not concede that point. The completeness of the remedy provided in HB 3349 is not before this court; in the light of its disposition of this case, the trial court did not consider or rule on the issue, and the parties have not asked us to do so. Accordingly, as to Chess plaintiffs, that is an issue that will have to be resolved on remand.