By Kentucky Chamber President and CEO Dave Adkisson
With $30 billion in unfunded liabilities, Kentucky’s public pension system is maxed out – and every day that passes without a fix is putting the state at greater financial risk. That is the message Kentucky’s business community is delivering to the General Assembly in calling for immediate reforms.
The Kentucky Chamber has been talking about the state’s unfunded pension liability for at least six years. We joined forces with the Kentucky League of Cities and the Prichard Committee for Academic Excellence in forming the Coalition for Sustainable Benefits in early 2007.
More recently, more than 50 employer groups from every corner of the state joined the Chamber, the National Federation of Independent Businesses and Associated General Contractors in signing a letter calling for meaningful pension reform in the current legislative session.
We have put this issue at the top of our legislative priorities for 2013 because Kentucky’s businesses have a significant stake in the pension systems, at both the state and local levels.
The unsustainable pension costs are taking money away from education and economic development, a short-sighted fiscal strategy that will result in a weakened position for Kentucky as it strives to compete in a global economy.
And then there is the issue of who is picking up the bill. Private employers, most of which are small, local businesses, directly contribute approximately 40 percent of all state revenue in income, corporate and sales taxes in addition to the individual income, payroll and sales taxes that employers pay.
In addition, national rating agencies have downgraded Kentucky’s bond rating three times in the last two years because of our pension debt. That means it will cost Kentucky more to finance major projects such as new school construction and other infrastructure improvements.
Legislation now before the General Assembly represents a significant and critical step forward in fixing Kentucky’s pension problems. The bill incorporates the bipartisan recommendations of a legislative task force that spent several months last year reviewing the problems and developing proposed solutions.
Senate Bill 2 is a responsible roadmap to start us down the road of sustainability.
At a minimum, this legislation must be passed to get our pension system on a sustainable path. And the recommendations must be passed in their entirety to avoid watering down them down to the point where they are essentially meaningless and represent no significant savings for taxpayers.
If the legislature and governor fail to do this, it will betray the confidence of taxpayers who expect our elected leaders to come up with bipartisan solutions in the time frame allotted by Kentucky’s Constitution. In other words, fix the problem now – during the regular session. Don’t wait for a special session to act.
Kentuckians are proud of their Commonwealth. But it we don’t fix the pension problem, we might have to rename our state as the Common Debt of Kentucky because we’ll be so deep it debt it will be almost impossible to dig our way out.
Here is our bottom line: Kentucky’s employers will only consider the 2013 session a success if meaningful pension reform is enacted.