Gov. Matt Bevin’s pension bill continues to advance through the Republican-led legislature, easily passing the Kentucky Senate’s State Government Committee on Tuesday.
Lawmakers are meeting for a special legislative session called by Bevin to address surging pension costs for the state’s regional universities and 118 “quasi” state agencies like health departments and rape crisis centers.
Bevin has proposed allowing the agencies to exit the state’s ailing pension system to avoid the spike in costs, as long as they either pay all or most of their share of the state’s pension debt.
It would also provide a discount to the agencies if they freeze pension benefits for their employees and move them into less-generous 401k-type plans.
Rep. James Tipton, a Republican from Taylorsville shepherding Bevin’s proposal through the legislature, said that the bill isn’t “perfect,” but it would provide much-needed relief to the agencies.
“I wish we weren’t here. I wish we didn’t have to have this discussion,” Tipton said. “But circumstances dictate that we make some very hard, some very important decisions.”
About 7,000 employees who work for the “quasi” agencies could have their pension benefits frozen and be moved into 401k-type retirement plans going forward.
The proposal passed out of the state House of Representatives on Monday with a narrow 52-46 vote after a lengthy debate.
The full Senate is expected to vote on the measure Wednesday morning, sending it to Bevin to sign it into law.
Senate Minority Leader Morgan McGarvey, a Democrat from Louisville, said that the state is incentivizing the agencies to cut benefits for their employees.
“We are financially incentivizing them when we know they’re hurting. And they’re hurting because of unfunded pension liabilities, they’re hurting because of a cut in state appropriations,” McGarvey said.
“We’re incentivizing them with money to cut benefits that employees believe they are going to be getting or believe they are entitled to.”
McGarvey said that the measure was “the first step in many of trying to dismantle the entire retirement system.”
Opponents of the bill argue that it is illegal because state workers are guaranteed to receive pension benefits promised to them when they were hired.
They also say that in order to pass the legislature, the measure needs a three-fifths majority of votes in each chamber — a threshold that wasn’t met when the bill passed the House on Monday.
After the hearing, Republican Senate Majority Leader Damon Thayer rebutted McGarvey’s claim that the measure’s supporters are trying to dismantle the pension system.
“That’s a red herring that the Democrats are throwing out here at the last minute to try to delay the bill or, I don’t know, appeal to their base. But clearly, we’re trying to save the system,” Thayer said.
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