As pension bill passes Senate 33-5, 'no' votes portend money fight to come
02/07/2013 06:20 PM
FRANKFORT — The pension reform bill cleared one hurdle and now begins what could be a long line of negotiations in order reform Kentucky’s financially hemorrhaging Kentucky Retirement System.
Senate Bill 2 passed the full Senate chamber on Thursday with a 33-5 vote. A majority of those voting “no” explained that they were opposing the bill because it didn’t outline where the money would come from to make the state’s full payment into the retirement system.
The bill mirrors the interim public pension task force report that passed with bipartisan support – which includes fully funding the required payments into the retirement system and ending cost of living adjustments.
The Senate version of the pension bill will go to the House, where Democratic leaders say they want to explicitly say how to make the extra payment of between $100 million and $300 million, depending on the estimates.
House Speaker Greg Stumbo, D-Prestonsburg, told reporters Wednesday that passing a bill that doesn’t outline where the extra money will come from would not be “true pension reform.”
Minority floor leader, R.J. Palmer, D-Winchester, told members of the Senate that they had to take action now, because of rating agency Standard & Poor’s recent downgrade to Kentucky’s financial stability from stable to negative.
“My fear is when Standard and Poor’s looks at it there is pension reform here, but we’re not directly dealing with the underfunded portion of our system,” Palmer said.
That funding concern was echoed by Sen. Tom Buford, R-Nicholasville, who voted against the measure. Buford asked his Senate colleagues, “How are you going to pay for this?”
“You’ve got to show a funding source. You’ve got to have a backbone. You’ve got to be ready to stand up and say here’s the money,” he said.
Several legislators expressed concerns that they have received from current pensioners about the changes the bill would make to their pension plan. Sen. Ernie Harris, R-Crestwood, asked Sen. Damon Thayer, the bill’s sponsor about those changes before endorsing the legislation.
“All of us will get comments from our constituents concerning the fact that we’re making radical changes to the pension system, but in fact we are not,” Harris said. “We are saving the retirement system.”
Jim Carroll, the co-founder and spokesperson for the Kentucky Government Retirees group, issued a statement Thursday condemning the actions of the Senate.
“…a compliant Senate has bulldozed ahead, mistaking haste for decisiveness.
Senate Bill 2 utterly fails to address the pension problem – the massive unfunded liability,” Carroll wrote. “We hope the General Assembly will ultimately recognize that the only path forward is identifying a dedicated revenue source to accelerate required state contributions. Failure to act this year could lead the Kentucky Employees non-hazardous fund into chaotic insolvency in just a couple of years.”
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