Sen. Thayer said Gov. Beshear committed to be involved in pension reform
08/07/2012 05:35 PM
The first issue Gov. Steve Beshear raised when meeting with Republican Sen. Damon Thayer over lunch at the governor’s mansion last month was reform to the state employee pension system — something Beshear has largely steered clear of.
Thayer, a Georgetown Republican, said on Pure Politics that Beshear “wanted to remain engaged and wanted to continue working” with the legislative task force looking at ways to shore up the system that currently faces a nearly $30 billion unfunded liability.
“I think the governor can and should and will play a significant role,” Thayer said. (8:45 of the interview.)
“I think that is very positive news. The governor didn’t talk about leadership right off the bat. The governor didn’t talk about the gambling bill right off the bat. The first thing he talked about — that he brought up, not me — was pension reform,” Thayer continued. “And I think that’s a very good sign. And it would be very good if Gov. Beshear engaged in the process and used the bullypulpit to make this a bipartisan or non-partisan solution to a problem that hopefully we don’t politicize.”
Beshear seemed most interested in a “hybrid plan” for future hires to the state ranks in which part of their retirement payments will go to 401(k)-style accounts and part into a pension fund.
Previously, the governor has said changes made to the retirement system in 2008 were adequate. The legislature approved a payment schedule to get the state back to the point that it was paying into the system the appropriate amount by 2025 and it tweaked benefits for new employees hired after July 1, 2008.
Options to fix the massive debt in the retirement system are not pleasant. And the situation continues to get worse as the system pays more out in benefits each month than the money it brings in through state government employer and employee contributions and investment income.
The main options to shore up the fund are to float a bond, which comes with an expensive federal tax as a penalty and is more debt, dramatically cut spending in other programs or raise taxes.
Thayer said as far as he is concerned, one of those options is a no-go.
“I just don’t see a willingness to raise taxes to take care of this pension problem,” Thayer said. (5:10)
The Pew Center on the States has agreed to help the pension task force that Thayer is co-chairing with state Rep. Mike Cherry, D-Princeton. The group began meeting in July as the situation continues to get increasingly bleak.
“It’s a problem for state government spending down the road. And it’s a problem for retaining the pensions that we’ve promised to the employees who are already in the system or retired,” Thayer said. (6:45)
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