Mere technicality. Just like with PERS and the Pension Obligation Bonds.

[See, Jack Bog's Blog: Sticking point (Portland and PGE and the Constitution)]

The bond proceeds are held in accounts for which the government employers get both the gain and loss from investments. The bond money is commingled with the Public Employee Retirement Fund (PERF) for investment purposes. It is available for the purchase of PGE, and other investments, through intermediaries like the Texas Pacific Group or Fred Meyers via Kolberg Kravis & Roberts or Enron through ownership of the S&P stock index fund known as SPY.

The creative method to escape the prohibition of government ownership of private enterprise was to entrust the money first to PERS with a statutory requirement that PERS re-entrust the money back to the Oregon Investment Council for investment. Having the intermediate involvement of PERS is a purely cosmetic device that has absolutely no role other than to attempt to escape the clear prohibition of the government taking an interest in private enterprise.

If money that is dedicated to cover PERS costs, in the future as they accrue, can be bonded today, and invested in risky private investments, then almost any future government expenditure could be funded the very same way, provided an "independent" entity is created to act as an intermediary entity. I suppose we could even call it a general purpose rainy day fund that is funded with either bonds or tax revenue; the source of the funds is less important than the manner in which it is invested.

The allowance of creative form over substance arguments to escape clear legal restrictions can render the law a mere technicality as it has with PERS and the Pension Obligation Bonds. If the employers could NOT have invested in private enterprise, rather than conservative investments yielding returns LESS than the cost to borrow, then the bonding would have had no economic justification, regardless of the mere technicalities.

The PERS Pension Obligation Bonds, so long as they remain commingled with PERF for investment purposes in private enterprise, and the benefits inure to the employer (through fungible reduction of other obligations so long as PERS is not terminated) in special Employer Lump Sum Accounts are simply void today, and everyday until this problem is fixed.

How could Mr. Greg Chaimov find a problem with Portland's plan to purchase PGE and not find a problem with the Oregon Investment Council's plan to buy PGE with public dollars? Erik Sten is right today that the constitutional prohibition on private ownership is a mere technicality if one looks only to anecdotal application of it in common governmental action, and particularly if Mr. Sten looks to the OIC's efforts specifically to buy PGE.

Like WPPSS, the Portland plan to buy PGE and the current Pension Obligation Bonds merely await the proper set of folks to enter a court room and get such deals declared void; void from the very outset of the deal, as was the argument in the WPPSS case. The trigger event for the Pension Obligation Bond case could be the termination of PERS (half accomplished today already) and the quandary of what to do with the employer accounts when the existence of PERS can no longer serve as a cloaking device to escape the clear constitutional prohibition of government investment in private enterprise.

If recent practice is the guide then Mr. Erik Sten is quite right, it is a mere technicality.