Bevin: Failure to fix state pensions is ‘road to insolvency’
LOUISVILLE, Ky. (AP) — Gov. Matt Bevin fired back Tuesday at critics of a GOP plan to revamp Kentucky’s chronically underfunded public pension systems, saying they have no alternatives and warning that doing nothing is a “path to insolvency.”
Speaking to a business group, Bevin said structural changes are needed to sustain the pension systems.
“Everybody would love to ignore it — all the fear mongers and the ‘chicken littles’ — the ‘sky-is-falling’ crowd that are just so upset about the fact that anything is changing,” the Republican governor said. “And yet the path we’re on is literally a direct path to insolvency financially.”
His comments came a day after Kentucky Education Association President Stephanie Winkler warned the pension plan would “devastate” public education.
Bevin countered that it would “keep promises, and actually resolves the problem.”
“None of the ‘sky-is-falling’ crowd has any solutions at all,” he added. “Nobody wants to be the governor who’s delivering this message. I want to be the puppies and rainbows and ribbon-cutting guy. That would be awesome”
Bevin and the state’s top two Republican legislative leaders last week unveiled a plan aimed at salvaging one of the worst-funded public retirement systems in the country. The governor plans to call for a special legislative session before year’s end to tackle the pension issue.
Under the plan, most of Kentucky’s future public employees would not get guaranteed pension payments. The plan to move most new hires into a 401(k)-style system would still put pressure on taxpayers, who would be legally required to make annual payments of nearly $2 billion to the system. That’s more than 20 percent of the state’s annual general fund spending.
The plan spares the state’s more than 166,000 current retirees from cuts in their pension checks.
No one knows how much the proposal would save, or how much it would require taxpayers to spend every year. Actuaries across the state’s various retirement systems are calculating that.
Bevin said the actual legislation aimed at shoring up the pension systems will be released soon, but indicated the bill will align with details announced last week. He didn’t offer a timeline for a special legislative session, but said “in the days immediately ahead we’re going to be putting this forward and voting on it.”
“We will fix this pension problem,” the governor said at an event sponsored by Greater Louisville Inc., the metro chamber of commerce. “We will pass this bill. We will come up with a solution that over the next three decades will resolve this crisis.”
About 300 current and retired educators expressed concerns about the pension plan Monday at a KEA forum in Madison County, media outlets reported. Winkler said she worries the plan could prompt a rash of teacher retirements and departures.
“We are heavy on people that are eligible to retire,” she said in a story in the Lexington Herald-Leader. “And we are heavy on people that have five years or less of experience. If all those people retire and all those people leave the profession because they’ve had a promise broken to them, there will be nobody left to educate our children if this proposal comes to fruition as presented.”
Bevin also told the business group he remains committed to overhauling Kentucky’s tax code. He backed off a suggestion earlier this year to lump pension and tax reform into one special session, but said Tuesday that updating the tax system remains a priority.
“Tax reform is coming,” he said.
Bevin said the current tax code is outdated and hurts Kentucky’s business competitiveness, and he raised some basic principles for tax system changes: “Lower and broaden and simplify.”