, Corbin, KY

State News

February 25, 2013

House considers ways to pay pension costs

CORBIN — By Ronnie Ellis

CNHI News Service

House Democrats are looking at using any growth revenues from the KEES scholarship program and taxing lottery tickets to pay for increased state employee pension costs.

The Republican-controlled Senate has passed a bill to shore up the pension system and stating the legislature’s “intent” to fully fund the annually required contribution to the system — estimated at about $327 million next year — but did not say where the money will come from.

Gov. Steve Beshear and House Speaker Greg Stumbo, D-Prestonsburg, have said they want to see a specified funding source before approving the Senate bill.

But Beshear also told lawmakers during his Feb. 6 State of the Commonwealth he would not agree to fund the pension system at the expense of education funding — which seems in conflict with what Yonts is proposing.

Yonts said Friday his committee will take up the pension bill at a special noon meeting on Tuesday when a committee substitute to the Senate bill will be adopted.

He said that substitute will include an identifiable funding source and he listed some likely proposals: applying the 6 percent sales tax to lottery ticket sales; directing the lottery corporation to expand its game offerings to the public; and using any growth in KEES money and needs based scholarship funds above the 2012 level for the pension contribution.

The funding proposal, Yonts said, will be in a separate revenue bill and will be considered by the House budget committee.

House Democrats plan to caucus Monday to discuss the various proposals.

Yonts said the revenue proposals seem “the most palatable in a non-budget year that would produce the required 60 votes for a revenue package.”

“We’re not taking away from education programs — we’re holding them harmless to the current level,” Yonts said in response to a question about contradicting Beshear’s position on education funds to fund the pension fix.

“I have not talked to the governor, but this is an issue that has been vetted with the (House) leadership and that’s the direction we currently intend to go in,” Yonts said.

Beshear again said he is unwilling to fund the pension system with money needed for education.

“It’s helpful to have continuing dialogue about options for funding state needs, including the pension shortfall, and I appreciate Speaker Stumbo’s efforts to look at many different solutions,” Beshear said in a statement.

He said the state must create a funding source to fund the pension system needs.

“We’ve already cut $1.6 billion from our state budget in the past five years, and I’m not willing to fund the pension program by carving money out of crucial services like education. I’m looking forward to continuing the dialogue,” Beshear said.

Yonts said the revenues being discussed will, “over time,” be enough to fund the annual pension contributions.

Doing that will allow lawmakers to fund the pension system as the Senate bill proposes and still allow the legislature to look at alternatives in the next session which then might allow all the KEES money again to be devoted to scholarships.

Yonts said House Democrats are trying to find a way to avoid “taxing people to fix the pension system.”

He conceded an argument that using KEES funds might be viewed as a tax on those in college or with children in college or that taxing lottery tickets might fall disproportionately on lower income groups.

Those are valid arguments, Yonts said, “but the question is do you want to tax things that may inhibit the growth of business? We don’t want to do that because we’ve got to have business income in this state to make revenue streams otherwise grow so maybe we divert this attachment of the lottery temporarily we hope.”

Yonts said he thinks at least some House Republicans will support the measure.

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