KY cities want ability to have restaurant tax and a 'hybrid' approach to the pension system

01/09/2012 07:43 AM

The Kentucky League of Cities is suggesting to lawmakers that now is the time to move to a “hybrid” retirement system in which part of future state and city employees’ salaries go toward a pension and part goes toward a 401(k)-style plan.

KLC President Bill Paxton and Executive Director Jon Steiner said on Pure Politics last week that the increases in what cities have to pay for their retirees and future retirees is increasingly taking away from other services.

In November, the Kentucky Retirement Systems raised the amount cities must pay for each of its employees’ retirement to 19.55 percent, up from 18.96 percent. And for hazardous employees, such as police, the rate is even higher: up to 37.6 percent from 35.76 percent.

“We have to do something or it’s going to be a train wreck for cities,” said Paxton, the longtime mayor of Paducah (1:10). He said it would “bankrupt cities” (4:40).

Steiner, who is starting his second year as executive director of the league of cities, said

“How many of you who own a business pay 19 percent toward your employees’ retirement? Or 37 percent toward your employees’ retirement? Nobody does,” Steiner said.

The two KLC officials also talked about why they are pushing for all cities — not just the smallest ones — to impose restaurant taxes. Money from that would go to cover costs of parks, which would free up general fund money for cities to cover over services. (6:30)

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