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The 2018 General Assembly and the proposed stage budget from

The 2018 General Assembly and the proposed stage budget from

Renee and her guests discuss the 2018 General Assembly and the proposed stage budget from Gov. Matt Bevin. Scheduled guests: Kentucky Senate Majority Floor Leader Damon Thayer, R-Georgetown; Sen. Robin Webb, D-Grayson; Kentucky House Majority Leader Jonathan Shell, R-Lancaster; and Kentucky House Minority Whip Wilson Stone, D-Scottsville.
S25 E6 Length 50:49 Premiere: 1.22.18

Legislators Debate the Governor’s Proposed Budget

New details are emerging about the revised pension reform legislation that could be introduced in the General Assembly as early as next week.

Four lawmakers appeared on KET’s Kentucky Tonight to discuss pensions, the state budget, and other issues facing the legislature this session. The guests were Senate Majority Floor Leader Damon Thayer (R-Georgetown), House Majority Leader Jonathan Shell (R-Lancaster), House Minority Whip Wilson Stone (D-Scottsville) and Sen. Robin Webb (D-Grayson).
 

 
Possible Changes to Pension Legislation
The pension reform bill that Republican legislative leaders hope to introduce soon won’t be exactly the same as the plan Gov. Matt Bevin presented in late October.

“The bill is going to be watered-down from what was proposed last fall,” Thayer says. “I would’ve preferred that route last fall, but we took the public sector input and it has gone into every decision that we have made about the bill that is forthcoming.”

The Bevin Administration’s plan called for placing most newly hired state employees and teachers as well as current workers who opt to stay on the job after 27 years of service into a new 401(k)-type defined-contribution plan. All current employees would also be required to contribute 3 percent of their pay to fund the health care benefits of retirees.

But those provisions and other aspects of the original proposal met stiff opposition from Democrats and some Republican lawmakers as well as current and retired public workers.

Under the new plan that’s still being drafted, according to Thayer, current employees who work past their retirement dates will continue to pay into their existing defined-benefit pension plan rather being shifted over to a 401(a) retirement plan. However futures hires will probably still go into a new defined-contribution plan that involves less risk for the state, says Thayer.

The mandatory contribution to retiree health care will remain, but Thayer says it will likely be a smaller amount.

“I think it’s fair to ask public employees to pay a little more for their health care because those in the private sector have been dealing with double-digit increases in their health care now for several years,” Thayer says. “It’s not going to be 3 percent, but it probably won’t be zero.”

Thayer says the new bill may also change how the retiree benefit factor is calculated, how sick days can be used to enhance retirement benefits, and other things that he says fall outside the inviolable contract between public employees and their employers. He says the bill will also maintain level-dollar funding for the state’s contribution to the various retirement plans. (The current payments are based on a percentage of payroll, which can fluctuate from year to year.)

Limiting the Fear of Change
Thayer and Rep. Jonathan Shell say the new legislation hasn’t been introduced yet because they continue to tweak the measure as they get financial scoring from actuaries on the various proposed changes. Thayer says he also wants a bill that House and Senate Republicans agree on so they can avoid having to take the measure to conference committee to work out any differences the two chambers might have.

As those talks continue, Democrats, who are in the minority in the legislature, remain frustrated that they aren’t more involved in the process of drafting the bill.

“I’m sitting here in the dark. I don’t know what’s going on, my people don’t know what’s going on,” says Sen. Robin Webb. “My worry is the long-term sustainability of what was proposed.”

Republican leaders hoped to tackle pension reform in the early days of the 2018 General Assembly. But legislators are now into the fourth week of the session and they’ve yet to see a final proposal. As the clock continues to tick down on the 60-day session, Webb and Rep. Wilson Stone say they fear Republican’s won’t leave enough time for lawmakers to debate the proposal and get input from their constituents.

“What we’ve done from the beginning of this pension reform discussion is frighten a lot of people,” Stone says. “We’ve frightened some of those people into retiring when they shouldn’t have.”

Shell says Republicans have remained largely mum on the details of their negotiations precisely so people aren’t needlessly upset by ideas that don’t make it into the final bill. He says it’s important to gather the facts and data to support the sustainability of the final proposal they present.

“It doesn’t do any of us any justice right now to start putting things out that are not going to get passed, that’s not going to get serious consideration only to frighten the general public [and] to frighten state employees,” says Shell.

Thayer says the public will have ample opportunity to comment on the proposed reforms and see the scoring of the bill. But given everything on lawmakers’ plates this session – pension reform, a new state budget, and a new road plan – Thayer hopes the legislature will pass a pension bill sooner rather than later.

Webb says it’s ok to let the pension debate play out as long as it takes.

“You’re going to have to adapt and shuck and jive a little bit and it may very well end up being toward the end of the session,” Webb says. “I don’t see anything wrong with having a product at the end of the session… The bottom line is let’s take our time.”

Impacts on the State Budget
In his budget proposal for the next biennium, Gov. Matt Bevin wants to put $1.1 billion into the Kentucky Retirement Systems and $2.3 billion into the Kentucky Teachers’ Retirement System. Shell says that infusion of cash accompanied by stronger investment returns will improve the financial health of the pensions plans that are at least $40 billion in the hole.

“The more money that we’re able to put in that system, the better the returns are, and the more unfunded liability that we’re able to pay down,” Shell says.

Stone says everyone agrees the pension problem needs to be addressed, but he doesn’t want reform to come at the expense of promises made to workers. He says Kentucky doesn’t pay its public-sector employees and teachers as well as other states, so good pension benefits help the commonwealth compete with those states to attract government workers.

“You have to ask this question: How much do you value our state employees, how much do you value our teachers, how much do you think we should contribute to their well being as they contribute to our own?” Stone says. “We need to be really careful about things that would be seen as a reduction in their overall compensation.”

Thayer says the governor and legislative Republicans are committed to fully funding the pension systems. But he warns that will force tough decisions elsewhere in the budget. Stone says that’s fueled serious concerns about some of those proposed cuts.

“There’s good things in the budget for social workers and a lot of issues,” Stone says, “but public education really took a beating.”

Under the Bevin Administration’s plan, the state will continue to send $3,981 per pupil to local school districts, which is the same as it’s been for several years. But Shell says the state would slash $127 million a year in student transportation funds to districts. Thayer says the state now pays 58 percent of school transportation costs; the Bevin plan reduces that to 25 percent.

Shell says the governor also proposed cutting $54 million in funding for health insurance for active teachers. Again local districts would be expected to make up that difference.

Stone says he fears rural school districts will take brunt of these cuts, which could lead to inequities in school funding. Thayer says schools can tap into their reserves to compensate for the cuts. He says the state’s 174 school districts have nearly $1 billion in reserve funds.

“I think it’s appropriate to ask [them] to tap into their rainy day fund as we try to rebuild ours,” says Thayer.

The governor’s plan also eliminates state funding for 70 programs. Shell says House budget committee members are reviewing Bevin’s plan line by line and will keep programs that have merit and cut those that don’t. He says they will also look for efficient ways to consolidate similar state programs.

“Cut down on the administrative costs, save the budget money, and do it in a more effective way,” Shell says. “Smaller, smarter government is always the best way to go.”

Bevin has also said that all “sacred cows” in the budget should be reviewed to determine if they warrant continued funding. Webb says she agrees with that idea, but she says the governor’s list of cuts will need to be tweaked by lawmakers.

“The budget is a reflection of your priorities, Webb says. “Now it’s up to us to show, as the branch [of government] closest to the people, what our priorities are. So I hope that we can bring back some equity for our school districts and avoid tuition increases in our public universities.”

Other Issues Before Lawmakers
Despite calls from Democrats to address pension and tax reform at the same time, Thayer says lawmakers simply may not have the bandwidth to tackle those issues and craft a state budget in this session. He says tax reform must be pro-business and that it will take time to transition Kentucky from a reliance on income taxes to a system based on sales and consumption taxes.

“There is a consensus that we need more well-paying jobs to put more people in the workforce, who will then be paying more taxes and that will contribute to the General Fund,” Thayer says. “The best way to do that is to change our tax code to make it more modern so we have a tax code that grows with our economy.”

One bill that is rapidly approaching final passage would put a proposed amendment to the state constitution on the November ballot. Senate Bill 3, also known as Marsy’s Law, would create a crime victims’ bill of rights. The measure has passed the Senate and is moving through the House of Representatives.

Thayer says lawmakers have made significant criminal justice reforms in recent years, so now it’s time to address the rights and needs of crime victims. Webb says many such protections already exist, although they may not be consistently available in all parts of the state.

“Marsy’s Law is going to make everybody feel better but certainly I don’t know if it’s going to actually have any more protections for a victim,” Webb says.

Thayer and Shell admit the pace of the 2018 session is slower than the 2017 session, when the new Republican majorities passed seven key bills and sent them to the governor for his signature in the first five days. Shell says Republicans are asking their members to be choosy about what bills they file, and committee chairs to be more selective in what bills they advance.

Webb and Stone say the slower, more deliberative pace is better for lawmakers and the public because it gives them more time to debate the issues. Plus they say it can result in better legislation being passed.

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Kentucky Tonight

About Kentucky Tonight

Kentucky Tonight, hosted by Renee Shaw, is an hour-long, weekly public affairs discussion program broadcasted live on Monday evenings. Discussions focus on issues confronting Kentuckians.

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Season 25 Episodes

6th Congressional District Candidates

S25 E36 Length 56:33 Premiere Date 10.29.18

3rd, 4th and 5th Congressional District Candidates

S25 E35 Length 54:03 Premiere Date 10.22.18

1st & 2nd District Candidates; H.S. Graduation Requirements

S25 E34 Length 58:38 Premiere Date 10.15.18

Midterm Elections

S25 E33 Length 56:33 Premiere Date 10.1.18

Work and Wages

S25 E32 Length 56:33 Premiere Date 9.24.18

Energy and the Environment

S25 E31 Length 56:35 Premiere Date 9.17.18

Sports Betting

S25 E30 Length 56:33 Premiere Date 9.10.18

Election Laws and Protecting Voting Rights

S25 E29 Length 56:33 Premiere Date 8.27.18

School Safety

S25 E25 Length 56:33 Premiere Date 8.20.18

Education Policy Issues

S25 E24 Length 56:33 Premiere Date 8.13.18

Kentucky's Medicaid Waiver

S25 E23 Length 56:34 Premiere Date 7.25.18

Immigration Issues

S25 E22 Length 56:36 Premiere Date 7.16.18

Debating Gun Laws

S25 E21 Length 56:33 Premiere Date 6.25.18

Economy and Trade

S25 E20 Length 56:33 Premiere Date 6.11.18

Discussing the Primary Election

S25 E18 Length 56:36 Premiere Date 5.21.18

6th District Democratic Congressional Primary Candidates

S25 E17 Length 56:38 Premiere Date 5.14.18

4th District Dem. Cong. Candidates and a Legislature Wrap-up

S25 E16 Length 59:04 Premiere Date 4.16.18

5th Congressional District Primary Candidates

S25 E15 Length 49:05 Premiere Date 4.9.18

Finding Compromise in the State Budget

S25 E13 Length 56:33 Premiere Date 3.26.18

The Budget and Public Pensions

S25 E12 Length 56:34 Premiere Date 3.19.18

Public Pension Reform

S25 E11 Length 56:34 Premiere Date 2.26.18

Violent Crime

S25 E10 Length 56:33 Premiere Date 2.19.18

Medical Marijuana

S25 E9 Length 56:33 Premiere Date 2.12.18

Advocates Discuss Education Issues

S25 E8 Length 56:34 Premiere Date 2.5.18

Education Priorities in the General Assembly

S25 E7 Length 56:33 Premiere Date 1.29.18

The 2018 General Assembly and the proposed stage budget from

S25 E6 Length 50:49 Premiere Date 1.22.18

Legislative Priorities for the General Assembly

S25 E5 Length 56:33 Premiere Date 1.9.18

Health Issues

S25 E4 Length 56:33 Premiere Date 12.18.17

National and State Politics

S25 E3 Length 56:33 Premiere Date 12.11.17

Federal Tax Reform

S25 E2 Length 56:33 Premiere Date 12.4.17

Policy Debate Over Pensions

S25 E1 Length 56:33 Premiere Date 11.6.17

About

Kentucky Tonight, hosted by Renee Shaw, is a public affairs discussion program broadcasted live on Monday nights at 8/7c on KET and KET.org/live.

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Kentucky Tonightwas awarded a 1997 regional Emmy by the Ohio Valley Chapter of the National Academy of Television Arts and Sciences. The series was also honored with a 1995 regional Emmy nomination.

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