House's latest plan for funding pensions: expand lottery and tax it

02/22/2013 11:58 AM

In House Democratic leaders’ ongoing search to find money to cover pension payments, they will recommend to House members a combination that includes expanding lottery games and taxing them, leaders say.

House Speaker Greg Stumbo, D-Prestonsburg, said applying the 6 percent sales tax to lottery tickets will generate $50 million, of which $15 million would go toward the KEES scholarships that are fully-funded through proceeds. That leaves $35 million toward the goal of finding more than $100 million in new revenue to allow Kentucky to make its full payment into the Kentucky Retirement System in more than a decade.

In addition, House Democratic Whip Tommy Thompson of Owensboro said the proposal leaders are working on also would require the Kentucky Lottery to expand to start new games they’re already authorized to operate but haven’t yet.

The leaders wouldn’t say what the rest of the proposal will include until they brief House Democrats and Republicans. Stumbo said those meetings should be finished Monday.

He said the moves should be “fairly easy” as compared to changing income tax because purchasing lottery tickets is purely voluntary. The goal, he said, is to avoid going to a special session to hammer out a way to fund the increased payment into the beleaguered pension system that is between four and five years from going broke.

Senate Republican leaders essentially shrugged off the latest suggestion, as they’ve done in reaction to previous ideas floated by House leaders.

“That’s the first I’ve heard of it,” Republican Senate President Robert Stivers said. “That’s generally not a good policy — much like taxing tobacco, I think it would probably decrease the sales.”

But House Democrats are sticking to their line: that passing pension reforms without a source of paying for the state’s share of contributions isn’t much of a reform.

“If they want to solve the problem, we have a funding source that’s not going to raise anybody’s taxes,” Stumbo said of the Senate. “They’ll put their big-boy pants on and we’ll have a conversation.”

About Ryan Alessi

Ryan Alessi joined cn|2 in May 2010 as senior managing editor and host of Pure Politics. He is now pursuing an advanced degree in non-fiction writing from Murray State University and is a regular contributor to Pure Politics. Ryan has covered politics for more than 14 years, including seven years as a reporter for the Lexington Herald-Leader. Ryan can be reached at purepolitics@twcable.com or @mycn2 on Twitter.

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