FRANKFORT — Shoring up the financially troubled pension system for government retirees is among the pressing issues that lawmakers will take up when they return to Frankfort on Tuesday.
The legislature, which met for a week in early January to elect House and Senate leaders before taking a three-week break, will remain in session through the end of March in hopes of resolving a $33 billion unfunded liability in the state's pension system.
Lawmakers want to put more money into pensions but haven't identified where the cash would come from. Some proponents say a separate proposal to reform the state's tax code could hold the answer.
"Things are churning rapidly," said House State Government Committee chairman Brent Yonts, D-Greenville. "I think we have to have a resolution this session or the public is going to be thoroughly outraged."
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Standard & Poor's Rating Services, citing Kentucky's pension crisis, revised the state's financial outlook last week from stable to negative. For that reason, Yonts said, lawmakers need to move quickly to develop and approve a plan to restore solvency to the pension system.
A legislative task force that spent months studying the pension issue recommended pumping in more money without saying where the money would come from. That task force rejected a proposal by the Pew Center on the States to issue bonds to cover the cost. But its members suggested two options that could help: repealing cost-of-living increases for retirees and creating a hybrid retirement plan similar to a 401(k) that blends defined benefits with defined contributions.
"Pension reform is our most crucial challenge this year, and that includes finding a way to pay for it without putting an undue burden on the backs of those who can least afford it," House Speaker Greg Stumbo said Monday.
Gov. Steve Beshear, a Democrat who is to deliver his State of the Commonwealth speech Wednesday, has urged lawmakers to resolve the pension issue this year.
Beshear also has said he's hopeful that lawmakers can pass a package of tax reforms that could generate needed cash. A panel of experts appointed by Beshear to review the state's tax code proposed a model that would generate about $690 million a year in additional revenue.
State Rep. Jim Wayne, a Louisville Democrat who served on the tax panel, has scheduled a news conference Tuesday morning to unveil tax reform legislation that he intends to file.
Lawmakers face a litany of other issues.
Stumbo, D-Prestonsburg, is expected to file legislation Tuesday that would hold accountable more than 1,200 special taxing districts that spend $2.7 billion a year. Taxing districts, which collect money to operate everything from rural fire departments to libraries, have proliferated across Kentucky during the past 50 years with little accountability. Stumbo said creating a stronger system of oversight is crucial to ensure that tax dollars are being spent wisely.
Stumbo and state Auditor Adam Edelen have scheduled an 11 a.m. news conference to discuss the proposal.
The House also is considering whether to move ahead with a plan to redraw boundaries for legislative districts. Stumbo has said he wants the House to get that once-a-decade chore finished as quickly as possible. The Senate has opted to put it off until next year.