By Tom Loftus, Louisville Courier Journal
Published 11:39 a.m. ET May 24, 2019 |
FRANKFORT — Gov. Matt Bevin’s proposed pension bill might need to be changed to give it a chance to pass the General Assembly in a special session before July 1.
House Majority Leader John “Bam” Carney, of Campbellsville, said in a phone interview Thursday that the governor is close to securing the votes he needs in the House but isn’t there yet.
“As we get closer to July 1, I think we have to acknowledge — if the governor is willing — we may have to look at some small changes because we’ve been kind of on this number for some time now, and we have only so many more days to get this done,” Carney said.
On April 30, the governor unveiled his bill to give so-called quasi-governmental agencies relief from a spike in pension costs that take effect in July.
Since then, he’s been trying to win support of his fellow Republicans, who hold majorities in the General Assembly, so he can call a special legislative session to pass the bill by the end of June.
Bevin did not sound inclined to make any changes when he warned an audience of about 60 people at a town hall meeting in Versailles on Tuesday of drastic implications and layoffs of “thousands” of public employees if a relief bill is not passed by the end of June.
“The bill’s done. I can tell you as a straight-up fact there has never been a bill since I have been the governor that has been more clearly explained to everybody …” Bevin said. “And anybody who’s opposed to it now, there’s no good reason other than the fact that they just want to stick it to their communities, I guess.”
The problem Bevin and lawmakers want to address is rooted in a 2017 decision of the board of the Kentucky Retirement Systems to lower key assumptions used in calculating how much government employers must pay to the state’s troubled pension plans.
The board lowered assumptions of how much interest will be earned on plan investments and of future growth of government payrolls. That resulted in a sharp increase in how much employers in the main pension plan for state workers must contribute to keep the plan afloat — from 49% of their payrolls to 83%.
State government began paying that higher rate last year, but the legislature gave a one-year delay to the quasi-governmental entities not directly controlled by the executive branch of government.
These groups include regional state universities, local health departments, mental health centers and programs that care for victims of rape, spouse abuse and child abuse.
Lawmakers passed a bill during this year’s regular session to grant another one-year delay in the higher rate that also contained provisions that would give these groups an option to pay up their liabilities to the state pension plan and get out.
But Bevin vetoed that bill. He noted it included an incorrect effective date and said he could not allow some of its provisions, including one that could result in suspension of retirement benefits to current retirees if their former employer exited the state plan but defaulted on installment payments on its liabilities.
The bill that Bevin now wants lawmakers to pass also gives the affected groups a one-year reprieve from paying the higher rate and a way for the groups to get out of the troubled state plan.
The problem with the bill most often cited by opponents — including former House Speaker Jeff Hoover, R-Jamestown — is within its provisions outlining how an affected group would pay up its liabilities and get out of the system.
The bill gives these employers the option to stay or leave the state plan but includes terms for paying off existing liabilities that encourage the employers to leave, freeze the accrued pensions of current employees and move them into new 401(k)-like plans for accruing future retirement benefits.
Unlike the bill passed by lawmakers that was vetoed, it does not give the employees an option to remain in the state plan with its defined benefits.
Rep. Scott Lewis, of Hartford, is one of several Republicans who says he’s concerned that this would result in a deep reduction in benefits that many employees of the affected groups have been counting on.
“The quasis really need some relief by July 1 …” Lewis said. “But the bill is tough because part of it hurts the employees, and I’m not for that. I don’t think that’s doing people right.
“I hate to say that I’m a definite no or a definite yes on this bill. … I do think something can pass if there’s some compromise,” he said.