House leaders prepare to change pension reform bill's benefit structure and funding

02/12/2013 07:01 PM

House Democratic leaders are looking to change the Senate’s pension reform bill by tweaking how the proposed benefit structure for new hires would be set up.

And House leaders are still searching for a way to pay for the extra money needed for the state to make its full payment into the Kentucky Retirement System for the first time in more than a decade.

House Speaker Greg Stumbo and Rep. Brent Yonts — the House state government committee chairman — said the caucus will decide as a whole on Wednesday which funding option makes the most sense. Stumbo confirmed that raising the cigarette tax to cover the extra money is one option but wouldn’t tell reporters what the others ones are.

Sen. Damon Thayer, R-Georgetown, said on the Senate floor that raising the per-pack tax from 60 cents to one dollar isn’t a long-term solution to funding the public pensions because the tax revenue will go down while retirement costs go up.

Stumbo, D-Prestonsburg, said he hoped that Yonts, D-Greenville, would present at Wednesday’s caucus meeting the options to fully fund the ARC (actuarial required payments) into the Kentucky Retirement System. The system has an $18 billion unfunded liability.

“After we share them with the caucus we’ll know which ones have some support or any support or no support,” Stumbo said.

Stumbo said as an option the tobacco tax at its peak revenue potential could generate $100 million to $115 million in new revenue. But he acknowledged tobacco use would decline.

Yonts, who is the chairman of the House State and Local Government Committee that will receive the Senate version of the pension bill, said he will not file a new bill but House members will make changes via a committee substitute.

“We’re looking at a defined benefit likelihood, I’m meeting with leadership later this week to define the direction we will be taking,” Yonts said. “I think it will be to – some modification of a defined benefit with some ability of the pension system or the legislature to change rates of contribution within some parameters.”

Because the decision will be made among the majority members no plan is concrete Yonts warned. Watch the full interview with Yonts below:

About Nick Storm

Nick Storm joined cn|2 in December 2011 as a reporter for Pure Politics. Throughout his career, Nick has covered several big political stories up close, including interviewing President Barack Obama on the campaign trail back in 2008. Nick says he loves being at the forefront of Kentucky politics and working with the brightest journalists in the commonwealth. Follow Nick on Twitter @Nick_Storm. Nick can be reached at 502-792-1107 or nicholas.storm@twcnews.com.

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Comments

  • sadkywkr wrote on February 13, 2013 09:58 AM :

    SB2 is an insult to tenured merit state employees. It should be scrapped and started over again. The Senate just wanted to put out something so it couldnt be said they did nothing. State employees are getting the shaft again from the same people that messed it up in the first place.

  • Cat Balz wrote on February 13, 2013 12:28 PM :

    Here’s a thought..Raise the cigarette tax for state workers and state retirees who smoke to 5 bucks a pack. With gas prices headed back to 4 bucks a gallon, raising the cigarette tax again on working Kaintucks who don’t even have guaranteed pensions seems a kick in the head to working folks. Tell me again how super wealthy Greg Stumbo is a friend to the working man?

  • Steven L. Frank; Covington City Commissioner / CFP wrote on February 13, 2013 08:52 PM :

    Economic Illiteracy at its finest. What is politically possible apparently is either the future insolvency of the pension system or the state itself. Why… because geniouses in the Government or the Pension Board apparently believe that if you have a good year in the market or a one time windfall like on healthcare savings that you can cut contributions the following year. We will have good years and we will have bad years, THE IDEA IS TO PUT AWAY CONSISTANTLY THE REQUIRED AMOUNT OVER THE ENTIRE TIME HORIZON INVOLVED BASED ON A REASONABLE RATE OF RETURN. You cannot look and recalibrate each year!!! The calculations our contribution rate is based on is not even using realistic assumptions on expected rates of return. We have been cheating our workers up to now by not putting enough money in our state pension funds based on even those improbable assumptions (that they would earn 7 3/4% on investments). Even more money has to be put aside if we are to keep the current or even a slightly modified version of what we currently have if we were going to use honest math in our public discourse.

  • sadkywkr wrote on February 14, 2013 09:39 AM :

    Cat Balz: There are many state employees who smoke and/or have family members who smoke. We have already paid our part from each paycheck for our contribution into the pension fund and now many will be paying higher taxes too. State employees don’t like taxes being raised any better than anyone else. If the people in charge of our pension program had paid in the amount they were supposed to we wouldnt have this problem. But they didnt and now they have to pay the piper. Unfortunately the money they have access to is OURS, the taxpayers. If this were the public sector, the people who have been mismanaging and misappropriate pension funds would be charged with embezzlement and facing possible jail time. Instead, they keep getting re-elected and given multiple opportunities to screw us over yet again.

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