Kentucky governor vetoes pension bill; special session looms

April 10, 2019
FILE - In this Feb. 7, 2019, file photo, Kentucky Gov. Matt Bevin delivers the State of the Commonwealth address to a joint session of the state legislature at the state Capitol in Frankfort, Ky. Bevin has vetoed a pension bill that was aimed at providing relief to some state-funded agencies struggling with ballooning retirement payments. (AP Photo/Bryan Woolston, File)

FRANKFORT, Ky. (AP) — Kentucky Gov. Matt Bevin on Tuesday vetoed a bill aimed at giving pension relief to some state-funded agencies struggling with ballooning retirement payments, signaling he’ll call lawmakers back for a special session to wrangle again with an issue that has confounded them in recent years.

The Republican governor said he appreciated lawmakers’ work but said parts of House Bill 358 “violate both the moral and legal obligation” to retirees.

In his election-year veto message, Bevin said: “HB 358 will very likely result in a suspension of pension and health insurance benefits already earned by retired employees of quasi-government agencies.” But taking a more conciliatory tone, he said he’s confident lawmakers will make the needed fixes in a special session that he intends to call in the coming months.

“We have a legal and a moral obligation to do what is required for our retirees,” the governor said in an interview Tuesday. “And this would have ... violated that obligation. And that just isn’t acceptable. And we have to get it right.”

The measure was passed by the GOP-dominated legislature on the last day of this year’s regular session in late March. As a result, lawmakers cannot override Bevin’s action.

Kentucky House Speaker David Osborne responded to the veto in a statement Tuesday night. He said legislators had spent “exhaustive amounts of time meeting with the stakeholders” before passing the bill. Osborne stressed the need to find a solution before calling another special session.

“We sent the governor a bill that we believed provided stability for the employers while keeping the state’s commitment to the retirement futures of our employees,” the statement read. “I am hopeful that the governor will begin meeting with us immediately to find a solution that ensures this balance.”

The proposal would have let the state’s 118 quasi-governmental agencies — which include rape crisis centers, public health departments and some universities — leave the state’s troubled pension system. But they would have exited by paying less than what they owe.

The concession was designed to save them from bankruptcy, but it could cost the already struggling system as much as $799 million.

That particular pension plan is at least $15 billion short of the money needed to pay retirement and health benefits over the next few decades.

While an agency could have chosen to leave the system, its employees could have opted to stay. The agencies would have had to pay for those employees, but their rate would have been much lower. Their payments would have increased by 1.5 percent each year.

“I truly do appreciate the good intentions of the General Assembly in enacting HB 358,” Bevin said in his veto message. “However, it, and we, can do much better.”

Bevin said he’ll call lawmakers back to the state Capitol for a special session prior to July 1 — the start of the new fiscal year. By tackling the issue before then, the affected agencies will get the needed relief, he said.

Bevin said his goal is to “provide the relief necessary to protect the solvency of these entities and their ability to provide services” while maximizing funding for the pension systems.

Since taking office after his 2015 election, Bevin has called for changes to the state’s struggling pension systems, but he said he’d like the impending special session to “stick to House Bill 358 and getting it nailed down.”

“Does the state ultimately need to look at every possible option to save our pension systems? Of course,” he said in the interview. “But for this special session, the focus should be on getting House Bill 358 legally sound and protective of retirees’ rights.”

Bevin has had a turbulent time in trying to revamp the strapped pension systems. In 2018, he called lawmakers back to the Capitol the week before Christmas to vote on a pension bill that had been struck down by the state Supreme Court. Lawmakers adjourned without passing any bills. Taxpayers were left with a bill of about $120,000 for the two-day session.

His veto comes as campaigning intensifies for this year’s governor’s race.

Bevin is seeking another four-year term. His GOP challengers are state Rep. Robert Goforth, William Woods and Ike Lawrence. On the Democratic side, candidates for governor include Attorney General Andy Beshear, former state Auditor Adam Edelen, state House Minority Floor Leader Rocky Adkins and frequent candidate Geoff Young.

Kentucky’s primary election is May 21. Kentucky is one of three states that will elect governors in 2019, along with Louisiana and Mississippi.

Asked about the potential political ramifications, Bevin said Tuesday: “Have you ever been under the assumption that I do things based on political calculation? That’s not my motivator here. My motivation is purely what is the right thing to do for retirees.”