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 has covered politics for more than 10 years, including 7 years as a reporter for the Lexington Herald-Leader. Follow Ryan on Twitter @cn2Alessi. Ryan can be reached at 502-792-1135 or


  • Cat Balz wrote on February 22, 2013 01:12 PM :

    This from a guy who once said he opposed casinos in Floyd County because there were too many poor people who couldn’t afford to lose money gambling. You can look it up.

  • Jim Carroll wrote on February 22, 2013 04:43 PM :

    The numbers “don’t pencil.” When did $327 million to reach the full ARC magically shrink to $100 million? No other state program is going to have a demand for the “natural growth” of the General Fund?
    But credit to the House for at least trying something. The Senate certainly has no answer, except to say “trust us,” we’ll fix this next year.

  • Bruce Layne wrote on February 23, 2013 09:51 AM :

    This is a pathetic excuse for sound governance and fiscal policy. A tax on expanded gambling? Really?!? It’s an embarrassment to all of Kentucky.

    How would you feel if you went to work and read an email from your manager saying that the company pension fund had been severely underfunded for years, but not to worry, because they now have a sound plan to correct this problem. They’re going to have cockroach races at lunch everyday, and the pensions would be funded by the gambling proceeds. I’m sure all of the employees would feel a lot better about their retirement security.

    To add insult to injury, we’re compelled to trust the very same people who underfunded (stole from) the Kentucky Retirement System in the first place. Yeah, let’s trust them to fix it.

    Here’s an idea! Let’s charge $100 for each lottery ticket! Then, we could pay for pensions and a new bridge for northern Kentucky and those services for low income children that Governor Beshear was holding hostage for a tax increase earlier this week and for Obamacare when the federal block grant bribes expire and a fat raise for legislators and….

    Besides, I clearly remember when the state lottery was enacted by our General Assembly. These people swore on a stack of Bibles that the money would be used exclusively for education. It’s for the children! That notion evaporated with the morning dew the day after the lottery bill was passed, and the money has been dumped into the general fund ever since to be used for the run-of-the-mill wasteful spending that is business as usual in Frankfort.

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