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Pensions, taxes and smoking bans in legislature’s final day

Pensions, taxes and smoking bans in legislature’s final day

Bill Stephens

March 29th, 2019

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By ADAM BEAM and BRUCE SCHREINER Associated Press

FRANKFORT, Ky. (AP) — Kentucky lawmakers have passed a bill to make one of the country’s most underfunded pension plans even worse, arguing it’s the best of a series of bad options needed to rescue some critical state-funded agencies that can’t afford their ballooning retirement payments.
House and Senate leaders revealed the plan Thursday, the final day of the 2019 legislative session. The Senate passed it by a vote of 26-11. The House passed it by a vote of 58-39 shortly after 11 p.m. EDT. It now heads to Republican Gov. Matt Bevin’s desk.
The proposal will let the state’s 118 quasi-governmental agencies — which include rape crisis centers, public health departments and some universities — leave the state’s troubled pension system. But they would exit by paying less than what they owe. The concession is 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 choose to leave the system, its employees could opt to stay. The agencies would have to pay for those employees, but their rate would be much lower. Their payments would increase by 1.5 percent each year.
The agencies say they need the help . They currently must set aside about 49 cents of every dollar they pay in salary for the retirement system. In July, that’s scheduled to jump to 84 cents of every dollar. Many say they could not afford those payments and would have to shut down.
“I’ve long maintained there is nothing but bad choices involved with this, and this is the best of all of those,” Republican Sen. Chris McDaniel said. “The options are bad for the general fund, for the taxpayer, for the delivery of services. And we are trying our best to strike the balance among all three of those.”
But some retirees were frustrated, angry the legislature passed a bill that would continue to underfund the system. Jim Carroll, president of Kentucky Government Retirees, called it “a disastrous funding policy for the nation’s most fragile state pension plan.”
“We have no confidence that legislators will be able to fully fund pensions in the 2020 session and beyond,” he said.
The proposal is one of many lawmakers rushed to pass on the final day of the 2019 legislative session.
The state Senate voted 37-1 to amend House bill 458 to, among other things, allow companies with locations in multiple states to spread their losses evenly among their subsidiaries. McDaniel said it would cost the state money, but said he didn’t know how much.
“It would be negative,” McDaniel said. “We’ll really have to see how people claim those losses and credits.”
House lawmakers passed the bill late Thursday to send it to the governor.
Lawmakers have already passed — and Gov. Matt Bevin signed into law — tax breaks for banks and nonprofits that will cost the state about $105 million a year.
“The one thing still missing from this session’s now-two revenue bills is revenue,” Democratic Senate floor leader Morgan McGarvey said. “We have not sought or worked together to get even the low-hanging fruit, the revenue this commonwealth needs to do things like fund our pensions, fund our infrastructure, fund our education and our health care.”
Several other bills awaited final action. One measure that won final passage would ban the use of all tobacco products on school grounds. The Senate voted 28-10 Thursday to send the measure to Bevin.
A majority of Kentucky’s school districts don’t ban tobacco products on campus. A provision would give school districts three years to opt out of the measure.
Republican Sen. Ralph Alvarado, a medical doctor and Bevin’s running mate in this year’s gubernatorial campaign, said curtailing youth smoking would have long-term benefits — making the state healthier and saving health care costs.
“It’s time for Kentucky to step up to the plate and to protect its children,” he said. “Let’s get our children healthier; let’s save taxpayer money; let’s save Kentucky lives.”
Republican Sen. John Schickel criticized the bill as “the very definition of government overreach and what some people call the ‘nanny state.'”
“We as conservative Republicans have no business dictating to local communities on matters such as this,” he said in the GOP-dominated chamber.
The measure’s journey through the legislature showed shifting sentiments in Kentucky, where tobacco was once a mainstay on farms across the state.
Another bill that won final passage would relax Kentucky’s liquor law by allowing alcohol to be consumed at private events in “dry” areas where alcohol sales are prohibited. The Senate voted 26-12 Thursday to send the bill to Bevin’s desk.
The bill’s supporters said those benefiting would include people wanting to serve alcohol at events at a handful of state parks in “dry” territory. Opponents said the measure ignores the will of voters who have kept their areas “dry” of alcohol.
Lawmakers also completed work on a bill that would give pregnant women the right to request “modest” accommodations on the job, such as more frequent breaks or lighter duties. The House sent the bill to the governor on an 87-5 vote.

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