Politics & Government

State pension overhaul stalls

FRANKFORT - The Senate and House are at a bitter impasse over how to address financial problems of pension funds for state retirees and teachers.

The issue has developed into the most contentious in the final days of this year's legislative session. It is not clear whether the differences between the two chambers will derail action on other legislation, particularly on making changes in the state budget -- for example, spending $9 million for runway improvements at Blue Grass Airport.

Both House Speaker Jody Richards, D-Bowling Green, and Senate President David Williams, R-Burkesville, gave floor speeches yesterday, claiming the position of the other's chamber on pension funds was wrong.

Richards, who is a candidate for governor, said there is "too much uncertainty" in a plan offered by the Republican-led Senate to improve the financial shape of pension funds for state retirees and retired teachers.

"I am scared to death about the unintended consequences if we rush to judgment on this issue," Richards said.

He said the best course would be to allow a special task force to come up with recommendations for the 2008 General Assembly.

He also noted that Williams reportedly had threatened to stop any new spending this year if the Democrat-controlled House did not act on the Senate plan.

"That is not right. We are an independent body and the Senate is not going to dictate what we do," Richards said.

Williams later said the Senate has not made any demands on the House, but that action should be taken now to "stop the hemorrhaging" in the retirement funds.

At one time in his speech, Williams claimed the House had broken its promise "not to open up the budget" this year. He shook his hands and arms in an apparent imitation of the speaker. It drew guffaws from his colleagues.

Asked later whether he thinks the House and Senate are deadlocked on this issue, Williams said of the House, "It sure sounds like they don't want to do anything."

But he expressed hope that the two chambers can address the pension issue this year. Today is the 27th day of the 30-day session.

On a 35-2 vote earlier this week, the Senate approved a measure to sell $538 million in bonds for the retirement system for state employees, and $290 million in bonds for teachers' retirement funds. The Senate plan also would limit benefits for future state hires, but would not affect current state employees and retirees.

Also yesterday, state Attorney General Greg Stumbo, a Democrat who is running for lieutenant governor with gubernatorial hopeful Bruce Lunsford, issued an opinion, saying the state constitution requires that the sale of such bonds to take care of pension shortfalls must be submitted to Kentucky voters for approval.

But Williams said that was not correct. He said he agreed with Sen. Julian Carroll, D-Frankfort, who said that if Stumbo were correct, bonds sold to bring Toyota to Kentucky 20 years ago should have been submitted to the voters.