The Richmond Register

April 4, 2013

Beshear signs pension bills

Will fund increased contributions

By Ronnie Ellis
CNHI News Service

FRANKFORT — Given his involvement in the last-minute negotiations on pension reform, it wasn’t surprising, but Gov. Steve Beshear announced Thursday he signed bills to change the pension system to fund increased contributions to it.

He also signed into law Senate Bill 13 which allows alcohol sales on election day and also incorporates recommendations made by an alcohol regulation task force.

Senate Bill 2, sponsored by Sen. Damon Thayer, R-Georgetown, changes pension benefits for new employees hired after January 2014, who will be placed in a half-defined benefits plan and half-cash balance plan. Existing defined benefits are retained for current employees and retirees and the changes do not affect teachers.

The reform package was opposed by the Kentucky Education Association, the Kentucky Public Pension Coalition and organized labor.

House Bill 440, originally sponsored by House Speaker Greg Stumbo, D-Prestonsburg, provides roughly $90 million in new funding to pay for the annually required contributions to the pension system. That measure reduces the states personal income tax credit to $10, allows purchasers of new cars to deduct the value of trade-ins from the amounts subject to sales taxes, and makes technical and compliance changes in other tax laws.

The full funding doesn’t kick in until July 2014. Part of the problem has been that lawmakers for years voted only partial payments into the pension system each year.

Beshear issued a statement Thursday afternoon saying the two measures address the $18 billion unfunded liability in the state employee pension system.

“As a result of this legislation, we fully honor the commitments made to state workers and retirees,” Beshear said.

Steve Barger, spokesman for the Public Pension Coalition, said the inclusion of a funding mechanism “is a positive development,” but he said employees are concerned that it doesn’t kick in until July 2014 while the change in benefits begins in January.

“Why the rush to this in the last two days if it doesn’t kick in for over a year and at the same time leave out of the negotiations the very people who are affected by it, the taxpaying public employees who made their contribution every time?” Barger asked.

He said those employees still aren’t happy about the change to a hybrid, cash balance plan for new employees.

The alcohol bill was amended to incorporate recommendations of an alcohol regulation task force appointed by Beshear.

It will allow tasting samples for wineries and distilleries and modernizes language, definitions and license requirements for alcohol sales.

Beshear still has not said if he’ll sign or veto two other closely watched measures: a bill to set up a regulatory framework for hemp cultivation if the federal government lifts its ban on hemp growing and House Bill 5, sponsored by Stumbo, which would set up a system to resolve disputes about Medicaid billing from managed care companies.

Beshear said this week he continues to review the hemp bill, sponsored by Sen. Paul Hornback, R-Shelbyville, and will discuss the bill with law enforcement agencies before deciding what to do. The Kentucky State Police and some other law enforcement agencies say the bill will complicate marijuana detection and eradication efforts.

Stumbo said last week he thinks Beshear may veto House Bill 5, but the ongoing complaints from medical providers about slow payment of Medicaid claims by managed care companies isn’t likely to go away. Beshear this week made the following statement on HB 5:

“As we expected, we are seeing positive results from the implementation of Medicaid managed care, such as reduced system costs and improved health outcomes.   We also fully anticipated there would be some bumps along the road during the transition. The Cabinet for Health and Family Services has worked with the managed care organizations and health care providers to reduce problems during the change and many concerns have been addressed. However, I recognize that some issues persist, and I continue to review this bill.”

Beshear has three options, one of which he must exercise by Friday: sign the bills into law; veto them, knowing the legislative session is over and lawmakers can’t override the vetoes; or allow them to become law without his signature.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.