FRANKFORT Franklin Circuit Judge Phillip Shepherd Wednesday declared a controversial pension reform bill enacted in the 2018 General Assembly unconstitutional.
Shepherd said the law violates Section 46 of the Kentucky Constitution which requires three readings of bills on three different days and a majority of the membership in each chamber to vote for appropriations bills, or those which establish debt. He did not rule on whether the bill violated the “inviolable contract,” a statutory guarantee of retirement benefits.
Attorney General Andy Beshear challenged the law along with the Kentucky Education Association and the state lodge of the Fraternal Order of Police. Beshear said the ruling is vindication for public employees “betrayed by their government that acted behind closed doors and in the dark of night.”
Kentucky’s public pension systems face estimated unfunded liabilities of between $40 billion and $60 billion and Gov. Matt Bevin and the republican controlled legislature have made shoring them up a priority.
Senate Bill 151 was originally a wastewater measure, but on the 57th day of the 60-day General Assembly, a House committee stripped out its original wording and substituted a watered-down version of a Senate pension reform bill which couldn’t garner enough votes to pass.
The amended measure was then passed the same day by both chambers – and read by “title only,” still referring to a wastewater bill.
Bevin has harshly criticized Shepherd over previous rulings and attempted to have Shepherd removed, contending he isn’t impartial because he is a member of the Judicial Retirement System – which was not addressed in SB 151. Supreme Court Justice John Minton denied that request.
Following Shepherd’s ruling Wednesday, Bevin’s Communications Director Elizabeth Kuhn issued the following statement:
“Today’s ruling from Judge Shepherd was expected in light of his inherent conflict in deciding the validity of SB 151, and an appeal from our legal team is imminent. Judge Shepherd refused to consider whether or not the bill violates the inviolable contract when issuing his ruling, and he invalidated the bill based, in part, on a procedural argument not even raised by AG Beshear. The consequences of this ruling are tremendous for Kentucky because hundreds, if not thousands, of bills have previously been passed by the General Assembly using the exact same process as Senate Bill 151. If all of these bills are now invalidated based on Judge Shepherd’s ruling, our legal system will descend into chaos. For example, cities and counties will go bankrupt without pension phase-in funding, and programs to combat the drug epidemic will be negatively impacted.”
Shepherd’s ruling addressed the question of whether his ruling calls into question the validity of other legislation.
“The only legislative action presently before this Court is the passage of SB 151, and the Court’s ruling is based only on the validity of that bill,” Shepherd wrote. He pointed to a previous case in which the court struck down legislation passed after midnight on its final day, noting the legislature re-enacted those bills in the ensuing session.
Stephanie Winkler, President of the KEA, said she “couldn’t be more happy and excited for the public employees.”
Spokesmen for the Kentucky Public Retirees and Kentucky Government Retirees also hailed the ruling, as did House Democratic Majority Leader Rocky Adkins. Democrats complained the bill was thrust upon legislators without prior notice and no Democratic voted for it.
Bevin’s attorneys argued SB 151 contained provisions in the original pension bill, SB 1, which received three readings in the Senate but was never voted on. Bevin’s General Counsel, Steve Pitt, also argued the court should defer to the legislature to interpret its own rules of procedure.
But in his 34-page ruling Shepherd wrote the requirement for three readings “is a constitutional mandate, enacted by the framers to ensure that legislators and the public know the substance and the content of the bills they vote on. It is a constitutional mandate – not an internal procedural rule of the General Assembly.”
To buttress the point, Shepherd quoted delegates to the 1891 Constitutional Convention, one of whom said: “Whenever a man wants to pass anything that is wrong, he tries to keep it from being printed, he tries to keep its contents unknown.”
He did not address what the constitution means by reading bills “at length,” writing the judiciary “may defer to the legislature on the mode of reading . . .” Pitt argued that an adverse ruling would require all bills to be read word for word and hopelessly shackle the legislature.
Shepherd also ruled the bill violated a requirement that appropriations bills or those establishing debt receive the votes of a majority of the elected membership in each chamber – 51 in the House and 20 in the Senate. The bill passed the House with only 49 votes.
Shepherd himself raised that issue during arguments in court, something Kuhn references in her statement.
Shepherd rejected one argument by Beshear – that the bill is invalid because it was signed by Speaker Pro Tempore David Osborne rather than by the Speaker. (Earlier in the session Jeff Hoover stepped down as Speaker in the wake of sexual harassment allegations.)