By Tom Latek
Kentucky Today
FRANKFORT, Ky. (KT) – Another point of contention has arisen between Democrats and Republicans in the General Assembly during talks over a public pension bill for the regional universities and quasi-governmental agencies.
The question: How many votes are needed for passage?
Under the state Constitution, during budget years, it only takes a simple majority to approve appropriations bills, but since the state budget covers two years, in the odd-numbered years it takes a supermajority of members for passage.
During a briefing on Gov. Matt Bevin’s proposed legislation for House Democrats earlier this month, Budget Director John Chilton said he thought it would take a supermajority, given the bill’s scope.
Both Senate President Robert Stivers, R-Manchester and House Speaker David Osborne, R-Prospect, say it only needs a simple majority; but House Minority Leader Rocky Adkins, D-Sandy Hook, maintains a supermajority is required.
“I am going to take the budget director’s advice and will tell you that it is an appropriations bill, in our opinion, and that it would require 60 votes,” Adkins said. “Folks around us that are giving us advice believe that as well, that it is an appropriations bill. The bill will end up back in court, to be honest with you, and I think that’s a big risk you’re taking.”
Still, Osborne told reporters Wednesday that even with a simple majority of 51 votes instead of 60, the governor’s proposal doesn’t have enough support to clear the House.
“As of right now, I don’t believe there is a comfort level that the necessary votes are there to pass that particular proposal, so I know there are ongoing discussions and efforts to get those votes.”
Adkins advocates freezing the pension costs to the universities and other agencies at its present level and let lawmakers deal with the issue in January, something Gov. Bevin has called continuing to kick the can down the road, costing the pensions systems another $120 million.
“The real issue,” Adkins said, “is not kicking the can down the road for another six months. The real issue is bringing relief to these quasi-governmental agencies, some of whom could be forced to close over these next few months if we don’t come in and do the responsible thing.”
Adkins also noted that when the Public Pension Oversight Board dropped the assumed rate of return on investments from 7.5 to 5.25 percent, that just exacerbated the situation.
Stivers says it’s very important to have the special session before July 1, due to increases in pension costs to the agencies, which are projected to be 87 percent of payroll, nearly double the current rate.
“For every $10,000 of payroll, that means there will be an additional payment of $8,700, to deal with traditional costs and legacy costs,” he explained. “So you can see why it becomes extraordinarily cumbersome, if not totally detrimental to many agencies.”
Stivers says freezing rates for another year would make things worse.
“That 87 percent will grow because your legacy costs aren’t being reduced, they’re being increased. So that 87 percent would go up to around 95 percent.”
The proposed legislation allows the universities and quasi-governmental agencies to opt-out of the pension system on July 1, 2020, paying either an actuarially determined lump sum or over a 30-year period.
Kentucky has one of the worst-funded public pension systems in the nation, with at least $43 billion in unfunded liability.
