Gov. Matt Bevin Monday defended his proposal to change the state’s pension systems before a group of business leaders in Lexington.
Late last week, Bevin released a much-anticipated draft of a bill that would move most future and some current retirees onto less-generous 401(k)-style plans.
The proposal would also tweak benefits to current employees and retirees, drawing fire from state employee groups that say the changes would be illegal.
For more than 90 minutes Monday, Bevin fielded questions from members of Commerce Lexington, a business group.
“The idea that it is being done on the backs of specific classes of Kentuckians is nonsense,” Bevin said. “You know who it’s being done on the back of? The people that pay taxes. That’s who’s paying for it.”
Combined, Kentucky has some of the worst-funded pension systems in the nation, demanding larger contributions to retirement funds from an already strained state budget.
Earlier this year, Bevin said that he would bring lawmakers back to Frankfort to hammer out pension changes and change the state’s tax code to bring more revenue into state coffers.
But Republican leaders of the legislature have been weary to the call for tax reform out of fear that it would lead to tax increases.
During the Lexington event on Monday, Bevin reiterated his desire for tax reform.
“The bottom line is we do need tax reform and it is coming,” Bevin said.
“It has been challenging to get people’s heads around even the issue of pension reform. Some still don’t even fully have their heads around it because it’s a hard thing to get around and for people who don’t make their living in this every day, it’s not easy to understand.”
But he also chided those who say the state should make tax changes to bring in more revenue before overhauling the pension system.
“Some people would truly see that any problem they want to solve on the pension front can be solved with a little more of your money,” Bevin said. “Nonsense. It’s silly to start figuring out how to throw more money in the hole if you don’t know how deep the hole is.”
Bevin’s recently released proposal would phase out the state’s use of a pension system that guarantees benefits to employees for life.
Instead, employees would have 401(k)-style plans where retirement benefits are based on how much employees and the state put into their individual retirement accounts during their working years.
On Monday, Bevin wouldn’t say when the special legislative session on pension reform will occur, though he has previously said it would happen later in the year.
“There’s no advantage in me giving a date at this point,” Bevin said.