For the second time in months, Kentucky Gov. Matt Bevin intends to reconvene state lawmakers for a special session to confront the state’s pension woes after vetoing a bill aimed at giving relief to some state-funded agencies struggling with ballooning retirement payments.
Bevin said Tuesday he’ll call lawmakers back to the state Capitol for a special session prior to July 1 — the start of a new fiscal year. Reaction to the Republican governor’s campaign-season action was mixed. Bevin is seeking a second term in this year’s election.
The advocacy group Kentucky Government Retirees commended Bevin for nixing a bill that it said exposed the Kentucky Retirement Systems to “unjustified risk.” It said the special session offers a chance for “genuine collaboration” among stakeholder groups.
“The path forward must include a funding solution that provides relief to quasi-government agencies while not fiscally damaging the nation’s most vulnerable state pension plan,” Jim Carroll, the group’s president, said in a statement.
Democrats criticized Republican handling of the pension issue and the taxpayer-backed expense the special session would incur.
“Gov. Bevin’s administration appointed the KRS board that worked to spike pension obligations of state agencies, including the quasi-government agencies affected by the governor’s veto,” Kentucky Democratic Party spokeswoman Marisa McNee said in a statement. “This is a crisis of their own making and it will continue to cost Kentuckians.”
Kentucky House and Senate Democratic leaders said: “This is not how you govern.”
“A major pension bill was pushed through on the last day of the legislative session even though the Republicans couldn’t answer basic questions as to how much it would cost or whether it would strip workers of their retirement,” the Democratic leadership statement said.
Meanwhile, Republican state Rep. Robert Goforth, who is challenging Bevin in next month’s gubernatorial primary, said the incumbent was again “attempting to force his will” on the legislature by calling a special session. He said Bevin “cannot be trusted to fairly deal with pension reform.”
Asked about the political ramifications of calling an election-year special session to deal with pensions, Bevin said in an interview Tuesday: “Have you ever been under the assumption that I do things based on political calculation? That’s not my motivator here. My motivation is purely what is the right thing to do for retirees.”
House Bill 358, the last-minute proposal that cleared the GOP-dominated legislature in late March, would have let the state’s 118 quasi-governmental agencies leave the state’s troubled pension system. Such agencies include rape crisis centers, public health departments and some universities. They would have exited the pension system by paying less than what they owe.
The concession was designed to save them from bankruptcy, but it could cost the already struggling system as much as $799 million.
That particular pension plan is at least $15 billion short of the money needed to pay retirement and health benefits over the next few decades.
While an agency could have chosen to leave the system, its employees could have opted to stay. The agencies would have had to pay for those employees, but their rate would have been much lower. Their payments would have increased by 1.5 percent each year.
In his veto message Tuesday, Bevin said: “I truly do appreciate the good intentions of the General Assembly in enacting HB 358. However, it, and we, can do much better.”
By tackling the issue before July 1, the affected agencies will get the needed relief, he said.
Bevin has had a turbulent time in trying to revamp the state’s strapped pension systems. Last year, he called lawmakers back to the Capitol the week before Christmas to vote on a pension bill that had been struck down by the state Supreme Court. Lawmakers adjourned without passing any bills. Taxpayers were left with a bill of about $120,000 for the two-day session.
Kentucky House Speaker David Osborne stressed the need to find a solution before calling another special session.
“We sent the governor a bill that we believed provided stability for the employers while keeping the state’s commitment to the retirement futures of our employees,” the Republican speaker said in a statement late Tuesday. “I am hopeful that the governor will begin meeting with us immediately to find a solution that ensures this balance.”
Bevin’s veto message warned that HB358 would have shifted “hundreds of millions of dollars” in costs to the troubled state pension plan.
The pension plan’s actuary had concluded that under terms of the bill, 74 of 118 affected agencies would not be able to pay off their liabilities under the installment plan within 30 years if all decided to get out and pay their obligations over time, the governor said.