House update: Bonding, taxing, redistricting and state pension reform
By Rep. David Floyd
50th District State Representative
REP. DAVID FLOYD
Wednesday, Feb. 27, 2013, 1 a.m. — Let’s just hit a few highlights, now that we’ve passed the halfway mark in this session. HB 7 was signed into law by Governor Beshear, paving the way for universities to issue bonds for capital construction projects like academic buildings and dormitories. Oh, and Commonwealth Stadium.
I voted for HB 7, but I have doubts about the wisdom of investing in buildings on college campuses as the years roll by. It might take another 50 years, but “online” education is probably the future. Did you know you can get a degree today from Harvard with only 16 credit hours on campus? That’s maybe four courses, one semester. It won’t be long until you don’t even have to set foot in Massachusetts. Or Lexington.
Tax reform is not going to happen this session, but this was never likely. Not only do tax measures in odd-year regular sessions require a three-fifths majority, the issue itself is highly contentious. “Tax reform” is a euphemism for “tax increases” nowadays. I understand that it’s logical to revise a system of taxation across the centuries, but I also know the heart of some in
the House majority; they don’t just want a different way of collecting tax revenue, they want more money to spend.
We have yet to draw new legislative district lines for the state House and state Senate. The congressional district lines were changed last year, but overreach on the part of both House and Senate resulted in a state Supreme Court ruling that threw out our other plans. So, we have to get it done before the next legislative elections in 2014.
I think we need to do it right now. Both House and Senate have already drawn preliminary lines, but those maps are not yet public. The House majority says it is prepared to pass new lines this week; the Senate majority wants to wait until the 2014 session. Why? Well, the Senate says the issue is too contentious and doesn’t want to disturb other important work this session; and after
all, we don’t need the new lines until the next election.
I could buy that if the “important work” was actually getting done. We could pass a redistricting plan within a week and, while there would be plenty of unhappy legislators, I see no valid reason to delay. Meanwhile, we have not yet completed important work . . . like pension reform.
This is a “must do” for this session, and I say that because tens of thousands of Kentuckians depend on their state retirement check. As you must know, the pension fund for state retirees (not including teachers, their fund is okay) is nearly depleted. Some say it will run out of money in five years.
Implementation of SB 2 would save the system from bankruptcy, although not
without some wailing and gnashing of teeth. It would require enormous additional state contributions, pension modifications for future employees, elimination of automatic pension increases through COLA’s, and new rules on getting another job with the state after you’ve retired.
SB 2 (pension reform) passed the Senate, and so now begins the political maneuvering. The House knows it must be done. They know the Senate knows it must be done. And so the House is ready to use pension reform as a way to wedge in a tax increase in order to fund those additional state contributions. The Senate says we can just figure that out next year in a budget session.
The House is floating the idea of attaching to SB 2 a new tax to fund the pension system now (most likely on the sale of lottery tickets) and dedicate those tax proceeds to the state pension fund. So your two dollar Powerball ticket will cost you two dollars and twelve cents.
I might amend the bill to keep the price at two dollars, and just reduce that which goes to the lottery by twelve cents.
Editor’s note: The House state government committee voted late Tuesday 17-1 to approve a modified version of SB2 and send it to the full House for consideration.
Senate President Robert Stivers told the Lexington Herald-Leader the House panel gutted SB 2 by changing the bill’s original provision to place new state employees on a 401(k)-style retirement plan with a state-guaranteed rate of return with the same defined-benefit pension plan for existing state workers.
I’m interested in your thoughts on these and other matters. This Saturday, state Sen. Jimmy Higdon and I will be at “Coffee with Dave” at the Boston Food Mart. We start at 10 a.m. and the coffee is on us. Hope to see you there!
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