FRANKFORT — As the final minutes of the 2013 General Assembly ticked away, Gov. Steve Beshear and House Speaker Greg Stumbo, D-Prestonsburg, worked feverishly to come up with a compromise on a pension fix that House Democrats could support.
Originally, Beshear proposed one which would have capped an automatic increase in the sales tax in the next budget cycle two cents below its scheduled rise and then recover that money in the General Fund by closing a standard $125 deduction in personal income taxes, eliminating a $20 personal credit and making some other technical changes to tax laws.
In all, the series of changes would have produced about $110 million in Fiscal Year 2014 and about $114 million in FY 2015.
The plan would have also retained the hybrid, cash balance plan for new employees that the Republican Senate passed but that the Democratic House at first refused to accept.
But the alternative plan, based on the gas tax, wouldn’t fly with the House Democrats and was harshly criticized by the Kentucky Education Association and Public Employee Pension Coalition. Representatives of both said they could not accept the hybrid, cash balance plan for new employees and both groups said they were locked out of negotiations on Beshear’s proposal.
And they let their state representatives in the House know about it.
Beshear met with the Democratic caucus Monday afternoon for just over two hours, trying to sell them the plan, but he didn’t seem hopeful when he emerged.
“We’re talking with the House and the Senate about a possible proposal to resolve the pension crisis and at the same time provide some funding for it,” Beshear said in the hallway after exiting the closed-door meeting with House Democrats.
“There are still some moving parts but I still have hope that before tomorrow at midnight we’ll be able to come to some sort of conclusion,” Beshear said.