Kentucky's legislative leaders have passed two bills to shore up the state's underfunded pension systems, effectively staving off a special session on the issue. The new plan would reduce a personal tax credit of $20 to $10, generating roughly 33 million in revenue that would go to General Fund, but lawmakers would use for pensions. It would also use revenue from technical changes in the state's tax code, as well as money from federal tax changes.
Overall, the plan would generate $96 million in the 2015 fiscal year and $100 million in 2016 fiscal year.
In a news conference with legislative leaders after the bill passed, Governor Steve Beshear said the process will work as a template for other states.
"This is a good solution to a thorny problem. A solution that other states around the country will be looking at as they look at options to solve their own crises," Beshear says.
Addressing the state's underfunded pension systems was a legislative priority going into the 2013 General Assembly session, because of its cost to the state budget.
House Speaker Greg Stumbo says the pension compromise is not bad for state workers.
"Every single person in Kentucky who is a public employee now, or will become one before Jan. 1 of 2014, any public retiree who is now receiving benefits are protected," Stumbo says.
But opponents of the bill say there are no promises the new revenue will go to pay for pensions and that there may be unintended consequences of the bill, because lawmakers did not get much time to review it.