Politics & Government

Bevin wants to deal with pension crisis, tax reform separately

Gov. Matt Bevin.
Gov. Matt Bevin. AP

Gov. Matt Bevin said Tuesday that the state will handle reform of the tax and pension systems separately, potentially indicating the need for two special legislative sessions this year.

“I think we will deal with them one at a time,” Bevin said in an interview Tuesday with WHAS radio host Terry Meiners. “First the pension.”

When asked whether the governor’s statement meant there would be separate special sessions, one for pension reform and one for tax reform, the governor’s office sent the Herald-Leader a link to the interview with the Louisville radio station.

In his State of the Commonwealth address in February, Bevin announced that there would be a special session on pension and tax reform. But in recent months, as lawmakers have fretted about the political risks of raising taxes, Bevin has made it clear that pension reform is his first priority.

“We’re going to work to save the pension system,” Bevin said. “It will not be easy; it will not be fun.”

Some lawmakers are not sure what the special sessions will entail, because the authority lies with the governor. A special session costs $60,000 a day, and it takes at least five days to pass a bill.

“It’s a fluid situation,” said John Cox, communications director for the Kentucky Senate Republicans. “The governor himself is the only one who has the power to call the legislature into special session, so we’re playing it by ear.”

House Speaker Jeff Hoover, R-Jamestown, could not be immediately reached for comment.

Kentucky has one of the worst-funded pensions in the country, and Bevin has made it clear that he plans to significantly reform the system. But Jim Carroll, the president of Kentucky Government Retirees, said his organization thinks the governor should do tax and pension reform together.

“Our position is that the two should be linked together because we don’t see anything happening to pensions that doesn’t require more money,” Carroll said.

Jason Bailey, executive director of the Kentucky Center for Economic Policy, said it’s a “waste of time” to do pension reform without tax reform.

“It doesn’t solve the problem,” Bailey said. “The only way we’re going to be able to pay down the unfunded pension is to generate the dollars to do that.”

Jim Waters, president of the Bluegrass Institute, took the other side, saying it’s preferable to do pension reform and tax reform separately.

“We can’t tax, spend, or borrow our way out of this,” Waters said. “It has to be a reform of the structure of benefits.”

Bevin said he doesn’t plan to raise taxes to fix the pension problem. During his State of the Commonwealth address, he said tax reform would not be revenue-neutral. In particular, he said, he wants to get rid of the estate tax and look into the $12 billion the state loses on tax loopholes.

“I have made very clear on this show and others: I do not intend to raise taxes to pay for the sins of the past,” Bevin said Tuesday.

Daniel Desrochers: 502-875-3793, @drdesrochers, @BGPolitics