The Richmond Register

March 23, 2014

Compromise is not that simple

By Ronnie Ellis
CNHI News Service

FRANKFORT — It’s tempting for a casual onlooker to wonder why the Democratic House and Republican Senate can’t make what on the surface looks like the obvious compromise on pension reform.

The Senate passed a measure based on recommendations of a task force to move new employees into a hybrid, cash-balance plan but maintain existing defined benefits for current employees and retirees.

It calls for the legislature to make full contributions to the system beginning with the next budget but provides no source for the money. Senate Republicans say the contribution can be funded by normal “revenue growth.”

The House restored defined benefits for new employees and passed a complicated funding measure which would use money from expanded lottery games and instant racing.

House Democrats say the current budget contains so much one-time, non-recurring revenue that any “growth revenue” is needed simply to maintain current services, which have been cut $1.6 billion in the past five years, imperiling education gains. Also, Medicaid and other costs continue to grow, they point out.

So why, you might ask, don’t they “come to the middle,” and adopt the Senate benefits structure while the Senate agrees to some form of new revenue to fund the contribution?

Well, because it’s about a lot more than pensions. It’s about ideology, policy goals and of course about the next election.

State employees and members of the Kentucky Education Association (which represents classified employees as well as teachers) are reliable Democratic constituencies. KEA contributes to Democratic candidates and can put volunteers into the field to get out the vote for Democrats.

A lot of Democrats would rather put a gun to their heads than oppose those groups, neither of which has had a raise in the past few budgets. State employees and teachers loudly remind lawmakers they paid into the retirement system — while lawmakers skipped full contributions for several years — and they don’t like the idea of treating new employees differently.

Democrats don’t want to agree to a deal which could lock them into an obligation to use existing funding for pensions when they’re looking for more money for education and human services.

But Republicans want to cut government services and spending with or without a larger pension obligation. If they can obligate the next General Assembly to spend more on pensions without new revenues, they can take that money from programs they oppose anyway, like health exchanges or Medicaid.

Many believe state workers and teachers are little more than an arm of the Kentucky Democratic Party who don’t vote for Republicans anyway. They see the state workforce as a bloated patronage spoils system for Democratic governors and a burden to taxpayers.

They believe KEA is more interested in teacher salaries than in educating children and the major obstacle to charter schools which many Republicans view as a panacea for education ills.

Finally, Republicans see the 2014 election as an opportunity to strengthen their grip on the Senate and break Democrats’ grip on the House. They would like nothing more than to go to voters next year and say they solved the pension problem and did it without raising taxes.

If state workers and teachers think Democrats caved on pensions under that scenario, why all the better for Republicans.

Should there be no deal because Democrats continue to demand new revenues, Republicans will blame obstructionist Democrats but say they stood firm against new taxes. Democrats understand very well what’s at stake in 2014.

The casual observer probably thinks Republicans and Democrats ought to put the state’s financial health ahead of their political interests. He would be right — but maybe a bit idealistic.

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.