A publication of the Kentucky Center for Public Service Journalism

Commentary: Chambers, including NKY, strongly support basic provisions of Senate Bill 1 on pensions

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With a major pension reform bill moving through the legislative process, we write on behalf of Kentucky’s business community in strong support of the basic provisions of Senate Bill 1 and commend our state leaders for addressing this issue that has long plagued our state.

Kentucky has one of the worst funded public employee pension systems in the country. In other words, the state doesn’t have enough money set aside to pay for the promises we’ve made to our public employees. The total unfunded liabilities range from $40 billion to $60 billion, an amount that is four to six times the size of Kentucky’s annual General Fund budget.

Businesses looking to locate new operations want to be confident the state’s fiscal house is in order and our state has favorable financial ratings. This pension crisis and our lower bond ratings are impacting our ability to attract companies and create new jobs.

The time is now to put the pension systems on a sustainable track. Every year that passes without significant changes simply kicks the can down the road and increases the chance that taxpayers will be asked to pay more to make the system solvent in the years ahead.

Without reform, we will soon see drastic cuts to education, transportation, public safety – all of which are critical to the business community and to all Kentuckians.

The business community is encouraged by structural reforms put forth in Senate Bill 1, many of which our chambers of commerce have advocated for several years, including ensuring a disciplined approach to requiring responsible payments into the pension systems, recognizing the financial stress on the systems caused by people living longer on average than when the systems were created, and lessening the large financial burden of the systems’ liabilities being placed solely on taxpayers. Senate Bill 1 would create greater consistency across all of Kentucky’s retirement plans and keep promises made to state workers.

There is no easy solution. We can’t simply tax our way out of this problem; changes to the structure of retirement benefits are required. The reality is that failing to act now by making the tough choices and bringing all sides to the table to compromise will mean even tougher choices in the future.

Adjusting to the financial reality our state faces will cause drastic stress on our state government, our schools, our cities and our counties. We commend the legislature for addressing the increased costs for cities and counties by providing a phase-in of how those costs will be paid. Our businesses will be at risk if their local payroll and property taxes must be increased to offset drastic increases in pension costs for our cities and counties.  

The business community has been calling for significant reforms to Kentucky’s pension systems for over a decade, and we commend Governor Matt Bevin, Acting Speaker of the House David Osborne, Senate President Robert Stivers and bill sponsor Senator Joe Bowen for working with countless stakeholders to put Kentucky’s pension systems on a sustainable path while still honoring the Commonwealth’s promises to public employees and retirees.

Kentucky Chamber of Commerce
Commerce Lexington
Greater Louisville, Inc.
Northern Kentucky Chamber

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  1. Christopher Daniel says:

    “We can’t simply tax our way out of this problem; changes to the structure of retirement benefits are required. ”
    This is a lie and a misrepresentation of the situation.

    Revenues should be raised. There are a number of progressive tax structures that would help.
    Rich Kentuckians and business leaders hate teachers, first responders and the middle class. This letter is evidence.

    • Betty Weaver says:

      If the truth were told, for a change, the state of Kentucky has needed tax reform/ new revenue for several years now. The so-called pension crisis is only a symptom of Kentucky’s need for more/ new revenue. It’s not a structural problem. It was not funded appropropriately–year after year after year! And when the money was there, it was taken away and used for some other purpose. Not enough money in the treasury to support government functions? Then, understand that you can’t buy something( government services) for nothing. We are ALL taxpayers-yes, even us lowly public employees. And yes, we still think KY needs new or modified tax streams. It really has little to do with pensions and more to do with the price of running a state government.

  2. KathyHeaberlin says:

    Schools have been stressed with cuts in the budgets for years. If you want to provide an excellent education, the public has to foot the bill. Mind you, “the public” includes the teachers. We help foot the bill just as every other taxpayer.Those of you in business have means to raise revenues. Other than property taxes and taxes on utilities, schools cannot raise their own operating capital. For those business people who are worried KY can’t offer anything to new businesses, a strong education system is one of the most important draws for any company. People want their children well educated. If you won’t pay your teachers properly, won’t fund buses and other important projects, won’t provide textbook money, etc., we can’t have great schools. One of the greatest things that will effect your businesses is teachers losing their pension and health benefits. Please ask yourself what benefits you would be willing to give up before you send letters to our legislators to cut teachers’ benefits. Teachers have prepaid these benefits, how about you?

  3. Chris Tobe says:

    SB1 is rotten to the core beneath all the illegal benefit cuts, its level $ mandate seeks to make CERS & TRS more like KERS the worst funded state plan in the country. Chambers signing on to this bankruptcy strategy is putting us on a rocky road

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