By now, the story of public pensions in Kentucky has become a familiar one: after years of underfunding by the state government, the public pension plans in the Bluegrass State are among the most poorly funded in the nation. Last year, Gov. Matt Bevin pledged to call a special session to address two topics: tax reform and public pensions. Tax reform quickly got dropped, but Gov. Bevin continued to say he would call a special session. That special session never happened and now, more than a month into Kentucky’s regular legislative session, there has been no legislation introduced to shore up funding for Kentucky’s public pension plans.
Tackling tax reform, as Gov. Bevin originally suggested, should be a high priority for Kentucky legislators. Reforming Kentucky’s porous tax code is also connected to fully funding pensions. As we reported last year, the commonwealth gives away more than $580 million per year to profitable corporations through tax loopholes and other corporate subsidies. In fact, Kentucky’s tax code is so riddled with loopholes that the state actually gives away more money than it collects each year. Simply closing all these loopholes would dramatically improve the state’s budget and allow the legislature to properly fund education, roads, public pensions, and other priorities.
Unfortunately, as stated above, Gov. Bevin quickly abandoned the cause of tax reform. He did, however, continue to promise a special session to address public pensions throughout the second half of 2017. Despite his repeated promises, he never called a special session. For public employees, retirees, and their families, this is probably a good thing. In October, Gov. Bevin unveiled a harsh pension cutting proposal that would have decimated retirement security for public employees in Kentucky and even affected current retirees living on a fixed income. Since there was never a special session, his proposal was never considered and hopefully it never will be.
With no special session in 2017, many expected the Kentucky legislature to quickly consider public pension legislation early in the regular 2018 legislative session. Again, though, political expediency outweighed the need to address pressing public policy concerns. As you undoubtedly know, 2018 is an election year and the deadline for candidates to file to run for the Kentucky state legislature was 4 pm on January 30th. It turns out that many members of the Kentucky legislature would prefer to know whether they are facing an opponent in November- and how tough of an opponent- before they vote on any potentially controversial legislation. The first month of the Kentucky legislative session has been remarkable for the complete lack of action on any major subject, including public pensions.
Once again, though, the rumor mill is churning. Just this past Friday, local newspapers reported that Republicans in the Kentucky legislature might unveil their major piece of pension legislation today. So far, there has been no word of a bill being introduced. Perhaps it will finally be introduced this evening or tomorrow or later this week or next week or next month. At this point, waiting for a major piece of public pension legislation in Kentucky seems like a lost cause. Meanwhile, Kentucky’s public employees and retirees wait for legislators to muster the courage to be responsible and fully fund the commonwealth’s public pension plans.