Kentucky's legislative leaders have passed two bills to shore up the state's underfunded pension systems, effectively staving off a special session on the issue.
The new plan would reduce a personal tax credit of $20 to $10, generating roughly 33 million in revenue that would go to General Fund, but lawmakers would use for pensions. It would also use revenue from technical changes in the state's tax code, as well as money from federal tax changes.
Overall, the plan would generate $96 million in the 2015 fiscal year and $100 million in 2016 fiscal year.
In a news conference with legislative leaders after the bill passed, Governor Steve Beshear said the process will work as a template for other states.
"This is a good solution to a thorny problem. A solution that other states around the country will be looking at as they look at options to solve their own crises," Beshear said.
Addressing the state's underfunded pension systems was a legislative priority going into the 2013 General Assembly session, because of its cost to the state budget.
House Speaker Greg Stumbo says the pension compromise is not bad for state workers.
"Every single person in Kentucky who is a public employee now, or will become one before Jan. 1 of 2014, any public retiree who is now receiving benefits are protected," Stumbo says.
But opponents of the bill say there are no promises the new revenue will go to pay for pensions and that there may be unintended consequences of the bill, because lawmakers did not get much time to review it.
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Kentucky legislative leaders have reached agreement on a plan aimed at shoring up the state's underfunded pension systems, staving off the need for a special session of the General Assembly.
The new plan would reduce a personal tax credit of $20 to $10, generating roughly 33 million in revenue that would go to General Fund, but lawmakers would use for pensions. It would also use revenue from technical changes in the state's tax code, as well as money from federal tax changes.
Overall, the plan would generate $96 million in the 2015 fiscal year and $100 million in 2016 fiscal year.
Before the end of Tuesday, the House will vote on both a funding bill and a reform bill that puts new state employees into a hybrid 401K-style plan, House Speaker Greg Stumbo said.
"Once the conference report is adopted, then those bills will be loaded into the machines, we'll give the members some time to review them and see what happens," he said.
Senate Majority Floor Leader Damon Thayer says he's chamber is also ready to pass the pension proposals.
"We have a deal that we can pass today on pensions, as long as we have the votes when we take the free conference committee reports to the floor," Thayer said.
Tuesday is the final day of the 2013 General Assembly session.
Addressing the state's underfunded pension systems was a legislative priority going into the 2013 General Assembly session, because of its cost to the state budget.
A deal approved Tuesday would avoid a special session to deal with the pensions issue.