Kentucky cities say Bevin's legal maneuver in pension case could bring financial ruin

The Kentucky League of Cities has asked to intervene in a lawsuit challenging Kentucky's new pension law, citing concern that recent developments in the case could jeopardize another new law that gave local governments relief from ballooning pension costs.

A hearing on the Lexington-based group's concern is scheduled for 9 a.m. Wednesday in Franklin Circuit Court.

Franklin Circuit Judge Phillip Shepherd ruled last week that the pension law, Senate Bill 151, is unconstitutional because the legislature's speedy process in passing it did not give the public a chance to participate.

Gov. Matt Bevin and other Republicans contend the law that provides pension relief to local governments, House Bill 362, is now in jeopardy because the legislature approved it in a similar fashion.

If HB 362 is ruled unconstitutional, the league said, "the results would be disastrous as numerous cities and counties would be forced into financial distress and possibly bankruptcy."

Without the legislation, local governments whose employees are part of the County Employees Retirement System were facing a 50 percent increase in their pension costs. The bill caps the annual increase at 12 percent for 10 years.

The phase-in bill, as it is called, "is not only important to KLC's members: it is essential," said the league's motion to intervene.

Attorney General Andy Beshear, who challenged the pension law with the Kentucky Education Association and the State Fraternal Order of Police, has said Judge Shepherd's ruling applied only to the pension law.

But on June 13, Bevin filed an amended petition in the pension case to bring the constitutionality of other laws before the court for a ruling. Beshear has filed a motion for the court to strike down the governor's amended petition.

Elizabeth Goss Kuhn, communications director for the governor's office, responded Tuesday that "because of the outrageous legal claims made in Attorney General Andy Beshear’s political lawsuit, the solvency of cities and counties is in jeopardy. Andy Beshear’s reckless behavior has gotten us to this point, and Gov. Bevin is fighting to ensure that crucial laws like HB 362 remain valid."

The league said in its motion that the amended petition "has now imperiled the viability of many other important laws passed in the 2018 legislative session."

It added: If the court allows Bevin's amended petition to go forward, "there is the very real potential" other legislation may be ruled unconstitutional.

"This includes HB 362, which allows Kentucky cities and counties to phase-in their increased pension contributions over a 10 year period as opposed to facing the steep increase scheduled to begin in 2018," the league said.

"We are watchful and hopeful that we can protect cities," said J.D. Chaney, the league's deputy executive director.

This story was originally published June 26, 2018 at 5:25 PM with the headline "Kentucky cities say Bevin's legal maneuver in pension case could bring financial ruin."