Beshear sees an opportunity to link pension and tax reform in 2013
12/05/2012 05:15 PM
Because the main suggested reform to the state’s underfunded pension system means finding more money, Gov. Steve Beshear said Wednesday that could give more urgency to tax reform.
A legislative pension task force has recommended the state pay the full payment to the retirement system for the first time in more than a decade. That would increase the amount the state spends on public pension system from about $505 million this year to more than $830 by 2015.
Beshear said Wednesday that he has reviewed the recommendations from the group, but the process of finding another $300 million is a political one.
“They did recommend we do put a considerable amount of money into help reduce that unfunded liability, but they made no recommendations about where that money should come from, and I understand that’s a political process that we’re going to have to go through,” Beshear said.
Beshear pointed to the other main priority during 2013 that could help fund that $300 million shortfall in revenue needed to fully fund the actuarially required contribution payment — tax reform.
“Perhaps there’s some ideas in the tax reform area that we can explore to help us solve and mitigate some of the problems we’ve got in the pension area,” Beshear said.
The Governor’s Blue Ribbon commission on taxes will meet on Thursday to finalize their recommendations on changing the tax code. A final report is expected to reach the Governor by Dec. 15. But the recommendations are just that. And they would need to be enacted on by the General Assembly.
“It’s gonna be a difficult process. I don’t think anybody goes into it with their eyes closed that dealing with taxes is always a tough thing in a political setting,” Beshear said expressing hope of finding common ground.
In the shorter legislative sessions during odd-years, each chamber would need a three-fifths super majority to pass any bill dealing with revenue. That could make it more likely tax reform would be done during a special session or in 2014.
“I could anticipate that perhaps we won’t get there by the time the regular session is over with and that will have to continue working and perhaps have a special session on one or both of those projects,” Beshear told the media.
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