Attorney General Andy Beshear told state lawmakers Wednesday that a proposal to overhaul Kentucky’s ailing public pension systems contains “multiple legal violations.”
In a six-page legal opinion address to lawmakers, Beshear outlined 21 ways he believes Senate Bill 1 violates the “inviolable contract” the state has made with teachers and employees of state and local governments.
“It is clear that if you pass SB 1 into law, you should expect numerous lawsuits, which the commonwealth will lose,” Beshear warned lawmakers.
Beshear, a Democrat, released his letter on Twitter about an hour before the Senate State and Local Government Committee was to hear the legislation backed by Republican leaders in the House and Senate.
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Instead of passing the bill, lawmakers should expand gambling in the state to fund its legal obligations to retirees, he suggested.
Expanded gambling would “create a dedicated revenue stream that will begin to address the unfunded liability, and will do so without raising taxes,” he wrote.
Kentucky’s public pension programs have an unfunded liability of more than $40 billion.
Republican Gov. Matt Bevin has repeatedly said he would not support expanded gambling.
Beshear said there are “multiple legal violations” in the pension bill, which seeks “to substantially alter and ultimately reduce the retirement benefits for current and future state, city and county retirees including teachers, police officers, firefighters and social workers.”
The state’s chief law-enforcement official reminded lawmakers that the legislature guaranteed Kentucky’s public employees certain retirement benefits that can’t be altered.
“The commonwealth’s public employees have upheld their end of the contract, working for decades on behalf of our Kentucky families,” said Beshear. “The General Assembly, on the other hand, will violate the contract if it passes the current version of SB 1 into law, as it would materially reduce, alter or impair the contract’s guaranteed benefits.”
For teachers, the bill “unlawfully reduces cost of living adjustments, caps the use of sick time, extends years of service to qualify for some benefits and forces teachers to contribute significantly more of their salaries to their retirement,” he wrote.
For state police officers, state employees and county employees, said Beshear, “the bill unlawfully changes how public employees’ retirement is calculated, reduces or caps sick leave benefits and imposes new deductions on already strapped salaries.”
“I think that It’s unfortunate that at this late date the Attorney General decides to weigh in on this,” said state Sen. Joe Bowen, R-Owensboro. “We’ve been working on this bill for months on end. We started engaging in this process last July, last August. And now, at the 11th hour, the Attorney General decides to weigh in on this, and I think that’s quite unfortunate.”
The bill was introduced to the public last Tuesday.
Senate President Robert Stivers, R-Manchester, said he believes the bill is on solid legal ground.