Pension vote

LRC Public Information

Rep. Les Yates, R-Winchester, (left) speaks with Rep. Deanna Frazier, R-Richmond, at their desks in the House on July 22.

FRANKFORT — Kentucky Gov. Matt Bevin's pension-relief proposal cleared the Republican-run state House by a slim margin Monday, surviving a crucial showdown as lawmakers continued a special legislative session convened by the GOP governor.

The 52-46 vote capped a debate lasting more than three hours, sending the legislation — House Bill 1 — to the Republican-dominated Senate, where a potential final vote could come Wednesday. It's the latest attempt by Bevin and lawmakers to shore up one of the country's worst-funded public pension systems.

In a tweet sent out as the House debated the bill, Bevin praised House Republicans for their "solid work" on the pension legislation. Nine GOP House members later voted against the measure, which House leaders said needed 51 votes to pass because it carries an emergency clause — language allowing a measure to take effectively immediately upon becoming law.

The bill aims to deliver relief for regional universities and quasi-governmental entities strapped by surging pension costs. Among those affected are key social safety-net agencies including public health departments, community mental health centers and domestic violence shelters.

"There are no good choices is the dilemma that we and these agencies find themselves in," the bill's sponsor, Republican James Tipton, said during the debate. "We are trying to carve a path forward that will allow them to remain viable and, in many cases, to remain open."

House Democrats warned the bill is likely to draw a court challenge, claiming it runs afoul of "inviolable contract" language guaranteeing workers the pension benefits they were promised when hired. For thousands working at those agencies, "the retirement security they have long counted on will no longer be there" if the bill becomes law, said Democratic Rep. Derrick Graham.

Democrats offered proposed amendments to alter the measure, but each time House Speaker David Osborne ruled the proposals out of order. Graham warned that passage of the governor's proposal would "set off a painful chain of events."

Leaders of those agencies will have to decide "whether to directly hurt the very people who make these agencies the success that they are, or they will have to decide what services they will have to cut to the bone, and that's if they are somehow lucky enough to keep their doors open."

Bevin's plan allows the agencies to stay with the Kentucky Retirement Systems at full cost; leave the retirement system by paying a lump sum equal to future projected benefits payments; or buy their way out in installment payments over 30 years. It extends a freeze on pension costs at the lower rate for another year for the regional universities and quasi-public agencies.

A Democratic alternative defeated in committee proposed a long-term freeze of retirement payments paid by the agencies along with redirecting tens of millions in retiree health insurance payments to pension liabilities for five years. The retiree health insurance fund would be paid back over time through higher annual payments to it. The plan's supporters said it wouldn't affect retirees' health care benefits or premiums.

The governor rolled out his proposal more than two months ago as a replacement for a similar measure Bevin vetoed in April after the legislature had ended its regular session. The governor spent weeks building support for his plan and those efforts paid off Monday — barely.

Bevin called lawmakers back for the special session that began last Friday. A special legislative session costs taxpayers about $66,000 per day from when the session begins to the day it adjourns. Bevin has been wrangling with the politically sensitive pension issue as he seeks reelection. He's being challenged by Democratic Attorney General Andy Beshear in November.

Beshear has said the restrictive language in Bevin's proclamation calling lawmakers into session created "a clear danger" that anything passed would draw a court challenge. Bevin's general counsel, Steve Pitt, said Beshear's concerns were "lacking in legal basis," saying a "more specific proclamation is more easily constitutional than a general one."

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