It may be true, as its title suggests, that the pension plan outlined last week by Gov. Matt Bevin and Republican legislative leaders is “keeping the promise.” But what promise and to whom?
Certainly, it doesn’t keep a promise to current or future public workers and retirees that they will retire with financial security.
Instead, they would be cast out of the security of an enormous group plan with defined benefits into the vagaries of individual savings plans that rise and fall at the whim of far-flung markets. The only consolation is that legislators, who’ve had a more generous state pension plan, will join them.
There’s no legislation yet, just a plan released with fanfare on Wednesday, but what’s been sketched out won’t even fulfill a promise to taxpayers. If this plan comes to fruition, they will be on the hook for even more money for several years, bearing the costs of fulfilling existing pension obligations plus contributing to the proposed individual retirement savings plans.
That’s just the money. With less retirement security, the state will struggle to recruit and retain competent employees to teach children, protect the environment, prosecute crimes and help families in crisis.
So, why do it?
To avoid anything that could be painted as a tax increase.
Even things as basic as extending sales tax to services, like legal and accounting work, dog grooming or limousine rides; or as fair-seeming as slashing tax breaks favoring one business or industry over another — the “sacred cows” Bevin took on in his State of the Commonwealth speech.
The governor soon learned from his party’s leaders that won’t fly with fellow Republicans, who control both houses.
But there’s also something even more insidious at work: a suggestion that there are two tiers of citizens, of workers — government bureaucrats who produce nothing while they wait for “lofty” pensions (averaging $21,246 a year in the largest plan), and private-sector warriors who produce things people want to buy, enriching the economy and themselves along the way.
Under this reasoning, public pensions just suck money out of hard-working private-sector employees’ pockets.
To support this narrative, the governor and his fellows have lobbed accusations, such as that teachers (who in Kentucky don’t get Social Security) hoard sick leave to boost their pensions. He’s also downplayed the fact that the mess Kentucky public pensions are in is a direct result of the state, as the employer, failing to contribute its full share to the pension funds for a decade or so, while workers contributed in every paycheck.
This verbal sleight of hand is essential to flip the narrative from a state that has cheated its employees, to employees who are trying to cheat the state. That makes it a lot easier to sell a plan that will leave tens of thousands of school teachers and other state workers and retirees poorer in retirement.
Oddly, Bevin uses Kentucky’ motto, “United we stand. Divided we fall,” to endorse this divisive scheme.
No, Governor, this is every man for himself. Future workers will be guaranteed nothing. If they want to risk a chunk of their wages in the market, the state says it will match a portion of that. If they outlive their nest egg or lose it in a market reversal, well, tough.
Now, that’s a promise.