Gov. Matt Bevin says he won’t propose tax increases to solve pension crisis

broken piggy bank with coins isolated on white background.

In radio interviews on Tuesday, Gov. Matt Bevin said he does not want to see the pension system woes remedied on the backs of the taxpayers through the form of a tax increase and strongly stated that while he does not have an exact date, a special session will absolutely be called in 2017 because the pension crisis can no longer wait for solutions.

Gov. Matt Bevin stated that Kentucky’s pension systems are “on the cusp of insolvency and if it were to become insolvent the checks stop coming.”  Because of this, Bevin stated the pension systems have to be saved.

To illustrate his point, the governor said even if Kentucky were to sell every asset it has including state parks, buildings, etc., “it would not come close to covering what is owed.”

As discussions and ideas surrounding an expected special session this fall to tackle reforms to the state’s tax code and pension systems, Bevin said the two are not being dealt with at the same time so that the taxpayers can “bail out” the systems through tax increases.

“I am not raising taxes to pay for the pension system. If the legislature wants to move that kind of legislation, they’re going to have to do it over my veto. I’m not intending to raise taxes. I’ve said that time and time again. People took a comment that I made about tax reform, saying that when we look at tax reform, we’re not necessarily looking at revenue neutral solutions, I said that and I meant that,” Bevin said on WHAS radio in Louisville in an interview with Leland Conway. “What I mean is, we have a very antiquated tax structure, but that’s a totally separate issue. I have in no way, shape or form ever said or implied nor do I intend to balance the shortcomings of the pension system on the backs of taxpayers.”

Bevin expressed similar sentiments in a radio interview the same day in western Kentucky with WKYX host Greg Dunker where he noted that there are “a few thousand people who will be receiving a pension from the state, and there are millions that are paying for it.”

In both interviews, the governor again strongly stated that he will call a special session to deal with these issues. And in discussing the hesitation expressed by some legislators for a special session to be called without a plan for reforms being shared with legislators and sold to the public by the administration, Bevin said he does not feel the situation needs explaining because the magnitude of the problem is obvious and illustrates the need for immediate action.

“If I, the governor, have to go out and make the case to legislators and to the people, then those legislators do not deserve to be representing people in Frankfort. They don’t understand the severity of this crisis,” Bevin said. “So they better come to this special session, they’ve already been having conversations among themselves and I’m glad…but I will tell you what, if they don’t come with their A game, if they don’t come intending to fix this problem, then they should not be sent back to Frankfort in 2018, that’s a straight-up fact. If they do not take this seriously because this is a big problem affecting hundreds of thousands of people who are retirees, but is affecting everyone in Kentucky that has to pay for this.”

In terms of what changes will be made to the pension systems, Bevin echoed previous comments he has made about honoring promises made to Kentucky’s retirees and said there will absolutely have to be changes to benefits for future hires.

Among those changes, Bevin mentioned an increase in the retirement age for state employees to more closely match what is seen in the private sector. Kentucky Chamber President and CEO Dave Adkisson recently discussed that and other changes in a segment of WKYT’s Kentucky Newsmakers program, which can be seen here.

Bevin had a discussion with a Kentucky teacher about the benefits he has been promised based on his retirement age and noted the fact that people are living longer than when the systems were created which means people are receiving benefits greater and longer than before, which is one of the reasons the state’s retirement systems have reached this tipping point.

The third phase of audits done on the system, which is expected to contain recommendations on how to fix the systems moving forward, will be presented to the Public Pension Oversight Board at its August 28 meeting. A special session to make changes to the systems is expected to follow after that report.

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Jacqueline Pitts
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