Beshear, legislative leaders hope to find fix for pension, avoid special session

jbrammer@herald-leader.com, bmusgrave@herald-leader.comMarch 7, 2013 

Commonwealth Address

Gov. Steve Beshear gives his State of the Commonwealth speech on the floor of the House of Representatives in Frankfort, Ky., Wednesday, Feb. 6, 2013. (AP Photo/James Crisp)

JAMES CRISP — AP

FRANKFORT — Hoping to avoid a special legislative session, Gov. Steve Beshear and legislative leaders will meet Friday in an effort to hammer out a deal to shore up the state's ailing pension system.

Lawmakers decided late Thursday to not convene the full House and Senate on Friday, giving legislative leaders time to determine whether they can find common ground on the pension issue.

"The governor wants — as we all do — to avoid a special session," said House Speaker Greg Stumbo, D-Prestonsburg. Stumbo declined to say when the meeting would occur.

Thursday was the 26th day of the 30-day session. Lawmakers voted on bills late into the evening, approving a bill to shore up the Lexington police and fire pension fund. The legislature will reconvene Monday and Tuesday, then recess until late March, when it will meet for two days to consider overriding any vetoes made by Beshear.

Beshear met behind closed doors in his Capitol office Thursday afternoon with Republican and Democratic legislative leaders, searching for a way to jump-start talks on the pension issue.

The governor met with Senate President Robert Stivers, Senate Majority Leader Damon Thayer, Stumbo and House Majority Leader Rocky Adkins. Stivers, R-Manchester, said the group discussed public pensions.

"We're seeing whether there is a possibility of something happening," he said. "The discussions were good and genial, and we're going to think about them a little bit."

Stivers said it "was appropriate to get with the governor to talk about the issues. Things we are considering are things the executive branch will have to implement."

Beshear pledged this week to get a measure passed this year to shore up the state's pension system for government retirees, even if that means calling a special legislative session.

The Democratic-led House and the Republican-led Senate have competing proposals to address the ailing pension system, which has a $33 billion unfunded liability.

The Senate proposal would create a hybrid 401(k)-style retirement plan for new employees. The House opposes that idea, preferring to stick with a defined-benefit pension plan.

The House also wants to generate money for pensions from expanded gambling. The Senate is balking at that.

A revenue bill passed by the House and now stalled in the Senate calls for the state lottery to add Keno and new online games to generate revenue for the pension system. It also would earmark tax revenue for pensions from slots-like instant racing machines at horse racetracks.

By Thursday night, several key bills had not yet passed both chambers. Late Thursday, the Senate by a 36-1 vote approved House Bill 430, which would shore up the Lexington police and fire pension fund. The bill now goes to the governor for his signature. The Lexington-Fayette Urban County Government would commit $20 million a year — up from the current $11 million — to more aggressively pay off the pension's unfunded liability over the next 30 years.

Police officers and firefighters would pay more of their salaries into the pension fund. Retirement benefits would be trimmed in several ways, including smaller cost-of-living adjustments for some retirees, smaller base pensions for disability retirements and a reduced payout formula for new hires.

"This is a remarkable day for Lexington," said Mayor Jim Gray, who thanked the legislators. "Once the governor signs this legislation, we've solved the biggest fiscal problem facing the city. Our city's financial health will be restored for the long-term."

Jack Brammer: (502) 227-1198. Twitter: @BGPolitics. Blog: bluegrasspolitics.bloginky.com Beth Musgrave: (502) 875-3793. Twitter: @BGPolitics. Blog: bluegrasspolitics.bloginky.com

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