House panel chooses Bevin’s pension plan; floor debate Monday

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FRANKFORT, Ky. (KT) --  Day two of the special session of the Kentucky General Assembly saw Gov. Matt Bevin’s public pension proposal clear a House committee on Saturday, while two bills sponsored by Democrats were defeated.


The legislation would affect 118 quasi-governmental agencies, including Kentucky’s regional public universities, local health departments, rape crisis centers and mental health boards.


House Bill 1, sponsored by Rep. James Tipton, R-Taylorsville, is Bevin’s proposal, which was spelled out in his special session call, formally issued Thursday afternoon.


House Bill 2, sponsored by Rep. Joe Graviss, D-Versailles, is the Democratic caucus counter proposal to the governor’s bill that was unveiled last week.


House Bill 3, sponsored by Rep. Angie Hatton, D-Whitesburg, freezes the employer contribution rate the quasi-governmental agencies would have to pay. 


Graviss was the first to appear before the House State Government Committee.  “We have a very simple, clean bill that is faster, cheaper, legal and provides certainty and stability,” he said.


Critics stated his bill would cost the state $3 billion more over a 24-year period by stating the value of the quasi-governmental agencies to Kentucky is much more. 


“The state budget office has put together a report, in which they concluded that the mandated services to the state of Kentucky are about $419 million a year,” Graviss said. “Using the $3 billion criticism, we can say ‘that would cost us over 10 billion over the same period,’” without the services provided by those agencies.


HB 2 went down to defeat on an 11-7 vote, with one member passing.


Next up was Hatton.  Her bill would simply freeze the rates paid by employers at the quasi-governmental agencies for another year.  “It would cost the state $121 million, but it’s there in case another bill is mired in court and we need a one-year insurance policy,” she said.      


HB 3 also failed 11-7 with one member passing.


Last up was HB 1, which Tipton said gave those agencies the most options.  They could remain in the Kentucky Employees Retirement System or opt out by paying off their unfunded liability either in a lump sum or by installments over 30 years.  Even if they opt out, those agencies could let long-term employees (known as Tier I and Tier II) remain in the state retirement system and pay the employers’ contribution.  If they don’t, an alternative such as a 401-K would have to be offered to all employees.


When asked by committee members how many agencies would leave and how many would remain in the system, Tipton said he didn’t know, nor how many opting-out would choose the various options.


Quasi-governmental agencies were first allowed to opt out of the system by legislation passed in 2015.  So far, three have left the system:  Kentucky Employers Mutual Insurance, Commonwealth Credit Union and most recently the Kentucky Bar Association.  Because the Kentucky Supreme Court had to sign off on the Bar Association action, supporters of HB 1 say they’re confident the High Court would not find the bill violates state employees’ inviolable contract.


HB 1 passed the committee 11-8, with Rep. Tommy Turner of Somerset the only Republican to join the Democratic minority.


As a result of the committee action, the House gave HB 1 its second reading, which sets the stage for a floor debate and a final vote, when the House begins day three of the special session Monday morning at 10.  The Senate will not convene until 4 p.m. on Monday, giving the House the chance to debate and vote on the bill which, if it passes, could have its first reading in the Senate that afternoon.


A special session costs Kentucky taxpayers more than $66,000 per day.

       

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