Daily Independent (Ashland, KY)

March 25, 2013

Clock is ticking

Timne is running out to reach a compromise on pensions

The Independent

ASHLAND — There is no shortage of unfinished business awaiting legislators as they gather in Frankfort today and Tuesday for the final two days of the 30-day 2013 Kentucky General Assembly. They include reaching an agreement on a bill clearing the way for Kentucky farmers to grow industrial hemp if the crop is legalized by the U.S. Congress, making it easier for Kentucky soldiers on active duty in foreign lands to vote in local and state elections in Kentucky, and allowing a Christians-only medical cost sharing plan to resume operation in Kentucky.

While those bills are important, there is one piece of unfinished business that clearly is the most important one still pending before legislators. Just what legislators do — or fail or do — on this issue before the end of Tuesday  could well serve as a measuring stick for the entire 2013 session and could decide whether Gov. Steve Beshear will be forced to call an expensive special session of the General Assembly to deal with the issue.

The issue, of course, is pension reform. Oddly enough, when the session began in January, there seemed to be broad, bipartisan agreement on just what to do to fix the state’s broken pension system that is gushing red ink at an alarming rate and will collapse if nothing is done.

After all, a bipartisan legislative task force had approved a plan of action on pensions that both Republican and Democratic legislative leaders agreed was a good starting point for enacting reform.

To their credit, both the Republican-controlled Senate and the Democratic-controlled House of Representatives approved bills designed to stop the flow of red ink in the state pension fund. Unfortunately, the differences between the House and Senate pension-reform bills were significant and reflect the different political philosophies of the two parties.

For the most part, the Senate approved the proposals of the task force significantly changing (and reducing) the retirement  benefits for future state employees. However, the Senate ignored the issue of the estimated $33 billion shortfall that now exists in the state pension fund,  promising to deal with that critical problem at a later date.

To its credit, the House dealt with the funding issue by approving bill that would designate revenue from instant racing games at race tracks and from new lottery games for the pension fund. However, the House rejected many of the proposals of the task force leaving unchanged many of the lucrative retirement benefits that caused the funding shortfall.

In short, the Senate bill attacks the problems that caused the funding shortfall but does not deal with how to erase the shortfall, while the House attacks the funding issue but ignores the problems that caused the shortfall. On their own, neither the House nor the Senate bills are what the state needs.

For nearly a month now, House and Senate leaders have been meeting with Gov. Steve Beshear in an attempt to reach a compromise on pension reform. Well, the clock is about the strike midnight with no agreement in sight. It’s put up or shut up time in Frankfort.

If no agreement is reached by the end of the day Tuesday, Beshear has promised to call a special session of the General Assembly on pension reform. However, legislators have had weeks to reach a compromise on this issue. If they can’t do it while the General Assembly is in session, what makes the governor think they can do it during a special session? In fact, without some sort of agreement on the table, a special session would be a waste of time and money.

However, if nothing is done, the problem will just get worse. The shortfall will continue to grow and the amount of money needed to fix the problem will get larger and larger. The pension woes already are costing the state money. The state’s bond rating was lowered because of its unfunded pension liabilities. That alone means that it costs the state more to borrow money. Doing nothing means the state runs the risk have having its bond rating lowered even more.

The clock is ticking. Now is the time for legislative leaders to stop playing political games and to reach a compromise.