Ignoring the pleas of Kentucky Gov. Matt Bevin, the Kentucky General Assembly voted Tuesday night to end the surprise special legislative session Bevin called Monday afternoon to address the state’s ailing public pension systems.
In a passionate speech to the House of Representatives, Speaker Pro-Tempore David Osborne, R-Prospect, said the decision to go home without passing a bill reflected a lack of time and conflicting opinions among the Republican caucus about how exactly to change the pension systems.
“We cannot shirk this, we cannot run from this. But this was not a problem that was created overnight ...” Osborne said. “We cannot solve it within the confines of a 5-day session.”
His announcement was greeted with applause from audience members in the gallery.
Osborne then promised to preside over the “ultimate solution to this problem,” presumably during the regular 2019 General Assembly, which begins January 8.
Outside his office, Bevin told reporters the legislature’s inability to pass a bill could put retirees’ pension checks in jeopardy.
“It should be of great concern to the taxpayers,” Bevin said. “It should of great concern, certainly, to the people who worked for the state and who were promised a pension. The odds of them getting that pension just went down dramatically tonight. It has got to be a priority or those people are up the creek.”
No state has ever defaulted on its pension system. Public pension experts say the most likely course is that all other state funding would be squeezed to honor the obligations.
House Republicans met behind closed doors for more than three hours Tuesday as Rep. Jerry Miller, R-Louisville, tried to whip up support in his caucus to pass a bill similar to Senate Bill 151, which was struck down last week by the Kentucky Supreme Court because of the rushed manner in which it was passed. It concluded with Republican leaders walking to the governor’s office to deliver the news that they didn’t have enough votes.
“It was a very candid discussion about where do we stand, what can we do to address this problem,” Stivers said. “How can we move forward?”
It was a legislative session that never completely got off the ground. As lawmakers trailed into the Capitol Monday night there were grumblings about disorganization and a lack of groundwork laid by the governor to secure votes for his proposal.
The governor delivered two bills to lawmakers — slimmed down versions of the bills they had already passed in the 2018 legislative session. But even Miller, the chairman of the House State Government Committee, didn’t get to look at them until Monday night. Bevin said Tuesday that even he had not read the full bill.
The bills Miller presented to his committee Tuesday afternoon were similar to SB 151, but with a few key differences, including the absence of “level dollar funding,” a strategy that would require Kentucky to front-load the sum it must pay to tackle its $37 billion public pension shortfall.
Miller instead proposed two committee substitutes that would have been closer to original bills the legislature passed at the end of March.
Stephen Pitt, the governor’s lawyer, said in a letter to lawmakers that Bevin’s proposal had purposefully removed any provisions that could be challenged in court, as two credit agencies had contacted the state with questions about last week’s Supreme Court ruling.
Those calls concerned Bevin enough that he summoned the legislature into session in dramatic fashion, saying the pension systems’ “unfunded liability represents the single greatest threat to the Commonwealth’s fiscal health.”
“I have absolute confidence that we have leadership in the House and the Senate... that they have what it takes to get this done,” Bevin told reporters Monday. “Whether they do or not I have no control over. I believe they will because I believe they must.”
With just a few days left before Christmas and absences among some Republican lawmakers, leaders couldn’t cobble together a path forward, costing taxpayers about $130,000 in the process, according to Stivers.
“It was worth a shot to spend, yeah, $130,000 for the two day period,” Stivers said. “But if it had taken effect and we had been able to pass it, it would have saved millions, billions over the 30 year process of funding the pension system.”
Bevin said he was surprised the legislature didn’t have the votes to pass the bill, given that there was nothing in the bills the legislature hadn’t yet seen.
“There is certainly disappointment on everybody’s part,” Osborne said. “We came in here hoping that we could find a quick resolution to this, a quick solution that would allow us to come in here and reaffirm our vote on 151.”
There was not disappointment from opponents of the bill, including many teachers and public employees who have protested proposed changes.
“Real leadership from these legislators demonstrates what our Commonwealth desperately needs: Serious and sober consideration for the rule of law,” said Stephanie Winkler, the president of the Kentucky Education Association.
Attorney General Andy Beshear, a Democratic candidate for governor in 2019, called the attempt to pass the legislation before the holidays “wrong and cruel.”
“Tonight, our values prevailed and partisanship took a backseat to what is right,” Beshear said in a prepared statement.
House Minority Leader Rocky Adkins, D-Sandy Hook, also a 2019 gubernatorial candidate who was subtly chided in Osborne’s floor speech, took a victory lap.
“You need to have the votes,” Adkins said. “Don’t bring us in here hastily, irresponsibly, as this governor did.”