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:
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