Bevin: Lawmakers need ‘the intestinal fortitude’ to pass pension reform

FRANKFORT — Gov. Matt Bevin on Tuesday scolded legislators for not passing pension reform during the nearly concluded legislative session.

Reverting to the rhetoric he used at the end of last year after legislative leaders quickly adjourned the special session he called to pass pension reform, Bevin said in a radio interview, “We just need men and women to step up, have the intestinal fortitude, and make hard decisions.”

Bevin ripped lawmakers for failing to address the pension crisis at the special session he called last December, and then taking a high-profile step of creating a working group that despite many meetings produced no bill for this session.

He said the General Assembly still has time to pass reform legislation when it returns for the final day of the session on March 28.

But if the session adjourns without passage of pension reform, he said he will not call another special session later this year for them to reconsider the issue.

“Not a chance. Not a chance,” Bevin said in the interview with Chad Young of WKCT radio in Bowling Green. “… Like Charlie Brown and the football with Lucy? I mean, seriously.”

Bevin said, “There’s no chance that I’m going to pay them extra money, or the taxpayers are going to pay them extra money, to come in and do a job that they still have time to do.”

The governor did not spell out in the interview the specific reforms he would like to see adopted on March 28 that would address the problems of Kentucky’s public retirement plans, which report nearly $43 billion in unfunded liabilities.

At times in the interview he spoke of Senate Bill 151, the measure that passed a year ago but was struck down by the Kentucky Supreme Court for the unconstitutional way it was rushed through the legislative process. Bevin wanted lawmakers to reconsider and pass this bill, or a close variation of it, at December’s special session.

And there appears no chance lawmakers will consider a major reform bill like that one which would have put all future teachers in a 401(k)-like “cash balance” plan rather than the current pension plan with defined benefits.

At other times in Tuesday’s interview, Bevin suggested lawmakers act on a bill that does have a reasonable chance of passage — a measure to grant relief to health departments, mental health agencies, regional state universities and other quasi-governmental entities that face soaring pension costs beginning July 1.

“They could still send something to my desk that’s not perfect — that’s not going to fix the problem in its entirety — but at least provide some resolution for some of our quasis” Bevin said of the quasi-governmental groups. “We have a number of groups that are struggling, that can’t afford to meet their minimum payments needed to keep their pension plans solvent.”

The House and Senate passed significantly different versions of the bill granting pension relief for these groups. Legislative leaders have said they hope to reach a compromise and pass this bill March 28.

Without action, these groups not directly part of state government will see their required annual pension contribution soar from 48 percent of payroll to 83 percent. Many health departments and some other agencies say they would have to close their doors. Regional universities (those other than the University of Louisville and University of Kentucky, which have their own pension plans) say the increase will force painful cutbacks.

Legislative leaders were infuriated in late December by Bevin blaming them for failure of a special session for which, they said, he had not properly prepared.

House Speaker David Osborne, R-Prospect, and House Majority leader John “Bam” Carney, R-Campbellsville, did not respond Tuesday afternoon to messages seeking a response to Bevin.

Senate Majority Leader Damon Thayer, R-Georgetown, declined on Tuesday to respond to Bevin’s criticism, but said the Senate version of the bill granting relief to quasi-government groups may yet be passed and is “significant reform for the universities and quasi-governmental agencies.”

But Jim Carroll, the president of the advocacy group Kentucky Government Retirees, noted that actuaries for the pension fund have concluded all versions of that bill will shift hundreds of millions of dollars in future pension costs to the pension plan covering most state employees — costs that must be covered by state taxpayers.

“That has nothing to do with the type of pension reform, structural reform and change of benefits that they’ve talked about in the past,” Carroll said.

Jason Bailey, executive director of the Kentucky Center for Economic Development, said lawmakers gave Bevin considerable leverage by not passing any pension legislation by last week. If they had done so, they could come back March 28 and override any Bevin veto.

If they pass a pension bill on March 28 and then adjourn, as they must, Bevin can veto it and the veto will stand. So, lawmakers eager to provide relief to the quasi-governmental groups must consider what Bevin requires in a pension bill, Bailey said.

“It’s a good opportunity for the governor to get what he wants on pensions,” Bailey said.

By Tom Loftus
Louisville Courier Journal