FRANKFORT — Lexington Mayor Jim Gray faces a showdown with Lexington police — key backers of his campaign to oust former Mayor Jim Newberry — over a costly proposal to sweeten their pension benefits.
The state legislature is considering a bill that would require the city to pay full health coverage for spouses and dependent children of retired Lexington police officers and firefighters.
The change would cost the city an estimated $2 million to $3 million a year, although the legislature has not done an actuarial evaluation of the bill to determine its cost, said Geoff Reed, a senior advisor to Gray.
"If it should become law, that would mean significant cuts in our budget," Reed said. "That could mean such things as fewer police officers and firefighters. We do not want that."
Currently, health insurance premiums are covered by the city for retirees only. The bill would affect the families of more than 900 retirees.
Lexington is the only city in Kentucky whose police and firefighters have their own pension fund. Although the city funds the program, which has an unfunded liability of $225 million, state legislative approval is required to make changes.
Police and firefighters in other Kentucky communities are covered by a pension fund within the Kentucky Retirement Systems. It pays for health insurance for the spouses of police and firefighters who served 20 years and were hired before July 2003.
Two officials with Fraternal Order of Police Bluegrass Lodge No. 4 in Lexington — legislative chairman Robert Sarrantonio and president Mike Sweeney — testified Tuesday on behalf of Senate Bill 136, sponsored by Sen. Tom Buford, R-Nicholasville.
They acknowledged that the city has financial problems but contended that police and firefighters were ignored when financial times were rosy. Police are never off the job and think they deserve family health coverage when they retire, Sarrantonio told members of the Senate Banking and Insurance Committee.
Sweeney noted that some Lexington police officers have been retired for 15 to 30 years and must use much of their pension to pay for family health insurance.
The city's financial problems, he said, are "not my problem, not my concern."
Sweeney said he was disappointed that no one from Lexington Professional Firefighters Local 526 was present. Efforts to reach local president Chris Bartley for comment were not successful.
Although Gray remains "strongly committed" to fulfilling the city's obligations to police officers and firefighters, "we have to face facts," said Richard Moloney, chief administrative officer of the Lexington-Fayette Urban County Government.
"Lexington's pension benefits for our police and firefighter friends are already more generous than any in the state," Moloney told lawmakers.
He said the city faces a budget shortfall of $11 million to $16 million this year. He also noted that the city has contributed more than $100 million in borrowed money to the fund in recent years.
The committee, chaired by Buford, did not vote on the bill Tuesday, but Buford said there are enough votes to advance the measure to the full Senate.
He suggested the different parties try to work out a compromise before his committee revisits the issue. For example, he said they might consider "gradual" changes, such as allowing health coverage for retirees' spouses and not their dependent children.
Sen. Julie Denton, R-Louisville, suggested that the legislature allow the city to negotiate pension benefits in collective bargaining sessions with police and firefighters.
Current state law does not allow such negotiations. "Any change in our pension must come through the legislature," Sarrantonio said.