With only one day left in this year’s legislative session, Kentucky House leaders are hopeful they have a deal to up shore up the state’s underfunded pension system. But there may not be time to get it through the legislature.
House Democrats’ are building support for a proposal that uses technical wrangling of revenue sources to cut some taxes while raising other funds to pay for pension reform. The current proposal would cut the gasoline tax by one cent, resulting in a loss of funds for the state road fund.
To offset that, House leaders put a new credit for used car trade-ins into the plan and got the governor to promise to replenish the road fund with any excess money. The plan also changes income tax code slightly, eliminating one deduction while raising the total dollar amount for others. And it counts on technical changes to various regulations raise at least $110 million in revenue a year, which would go to pensions.
The plan would also put new public employees into a hybrid 401K-style pension plan, which the Senate has pushed for. The House Democratic caucus approved the proposal late Monday, but Senate Majority Floor Leader Damon Thayer says Senate leadership has not seen it.
“I’m not going to comment on a proposal I haven’t seen,” Thayer said. “And [one] that we haven’t had the time to review. We have been working here for three weeks with Gov. Beshear.”
The plan does not sit well with a coalition set up to help protect public pensioners and it’s not clear if there are enough votes to pass the measure before lawmakers adjourn for the year. Despite caucus support in the House, Speaker Greg Stumbo said he’s not sure a deal can happen by midnight Tuesday, which is the last day of the current session.
“You know it was a long day and obviously everybody tried hard and I don’t know if we’re going to get a pension bill or not,” he said.
A special session may be called later in the year to deal with pension reform.