As Senate passes pension reform bill, governor says he doesn't 'see a need' for it
02/11/2011 07:02 PM
(WITH VIDEO) FRANKFORT — The Republican-led state Senate approved a proposal on Friday aimed at stemming increasing public pension costs by revamping the system for future hires — a plan Democratic Gov. Steve Beshear immediately said was unnecessary.
Republicans unveiled a revised version of the bill, Senate Bill 2, during a committee meeting Friday morning and off the floor of the state Senate early Friday afternoon by a 24-13 vote.
“We have a looming fiscal crisis here. And we have to do more to ensure that we protect our current employees, our current retirees and the taxpayers who pay for all of these plans through their taxes,” said Sen. Damon Thayer, a Georgetown Republican and chairman of the Senate State and Local Government Committee.
The bill would create a new retirement system fund starting July 2012. And state workers’ benefits would be structured similar to a 401(k) plan, in which employee contributions would be matched by the state for a retirement account. Currently, retirees receive set pension checks each month that are calculated based on their highest three annual state salaries.
The revised version would hold down the amount local governments would have to contribute right away into the new retirement system — a concession to cities and counties already struggling to make increased payments for their retirees.
The main concern among city leaders would be that switching to a 401(k)-style defined contribution approach would be overly expensive in the short-run because they would have to paying the pensions of current retirees and make payments into the retirement accounts of the new hires simultaneously.
But after the committee, the governor said he wouldn’t support such measures after the legislature just made some tweaks to the retirement system in 2008.
“I really don’t see a need for any major piece of legislation in that area,” Beshear said.
Thirteen senators — all Democrats — opposed the bill.
Sen. Walter Blevins, D-Sandy Hook, said he was concerned about the speed by which the bill passed through the chamber on Friday. And he said the Kentucky Association of Counties’ uncertainty in whether to back the bill also was a factor.
County and cities have been saddled with increasing their contributions the retirement system for local government workers. That is eating up a greater portion of their budgets.
- Don Weber
Below the Fold
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