The Boyd County Fiscal Court voted to keep the local health department taxing rate the same during its most recent meeting.
As we've reported in the last two weeks, there's a lot going on at the Boyd/Ashland Health Department when it comes to having to deal with Kentucky's chaotic, broken public pension system. In the next fiscal year, the health department faces a $500,000 shortfall due to increased pension costs. The shortage is due to the Commonwealth of Kentucky's recently passed pension reform combined with skyrocketing contribution rates to the pension system.
Gov. Matt Bevin called a special session this summer to address just a small portion of the pension crisis — the retirement plans and pensions of employees of what are known as "quasi-government" agencies such as health departments, regional universities and some rape crisis shelters. The so-called solution that was passed gave health departments a one year reprieve that keeps their contribution rate into the system at 49 percent. However, next year, it is expected to jump to 83 percent. Thus, the nearly $500,000 deficit.
Hardy had asked to take the Health Department tax rate in Boyd County from 06 cents per $100 to 08 cents per 100 of valuation, representing a 33 percent increase, to cover the shortfall. After a discussion and a series of meetings with local health officials the Fiscal Court voted to keep the tax rate the same.
Fiscal Court members said they certainly don't want to raise taxes. They also said it is entirely possible the state could come back and make more changes that could alter the equation. We certainly understand their thoughts on this. What the whole situation amounts to is the state coming up with an inadequate solution as it stands now and basically leaving it up to local officials to either make up for the flawed solution through tax increases or leave it to the health districts to start cutting employees, freezing benefits and cutting services.
Here we have the ugly reality of a broken pension system and we are confronted with inadequate attempts to fix it. The bitter truth here is that when the realities of this flawed, broken system come to pass, there will be no one who is happy combined with a lot of pain and suffering.
There is much more misery to come. In Louisa on Thursday we listened to Gov. Matt Bevin say that one of the non-hazardous retirement system plans in Kentucky is currently funded at just 13 percent. He offered up a series of stark, ominous warnings about the future of these plans if they aren't fixed. Like him or not, when you listen to Bevin on pensions, he comes across as credible.
Now, we recognize that there are a lot of politics at play on this issue — and that is an understatement. Democratic opponent Andy Beshear has offered up his own proposals to fix the system. He's talked about legalizing sports betting, medicinal marijuana and changing the tax structure to make sure the state is collecting its fair share from corporations, etc.
All good ideas in our view. We suspect that the truth, and the solutions, are found in the middle. We've said it before and we will say it again. Here is our humble, simplistic approach to solutions:
1. Everyone acknowledges we have a crisis on our hands.
2. Everyone comes to the table with compromise in mind.
3. Everyone acknowledges the system needs dramatic reform because the old school approach to public pensions is not sustainable. The numbers don't scratch out. This does not mean an elimination of public retirement systems. However, they have to be changed so that they can actually be paid for.
4. Comprehensive tax increases combined with cutting government services will be necessary to fix this.
This requires compromise and bipartisanship from all sides on a statewide level. Instead, we have a piecemeal approach in which we see the possible problem solving ending up in the laps of our local officials. We certainly understand why the Fiscal Court voted to keep the tax rate the same, especially against this backdrop.
We want to see a solution for our health departments that doesn't result in layoffs. We have a top notch health department. They have done a stellar job for us and provide vital services. The solutions on these issues need to come from Frankfort. In our view the health department's employees and retirees deserve better.
However, we are not optimistic that bipartisan solutions are even within reach, no less possible. Everyone is locked in along partisan lines with compromise nowhere in sight. With this as our reality in Kentucky, everyone should prepare for the worst when it comes to Kentucky's broken pension system and how this will all play out. If no one wants to compromise, this is going to be very ugly in the coming years.