Without new revenue from tax increases, any state budget will be another blueprint for Kentucky’s decline. That’s just reality.
The Senate rejected House efforts to raise $250 million yearly in new revenue for education and to avoid a 6.25 percent cut in support for colleges and universities.
In the final days of budget negotiating, the House should reject Senate efforts to use the budget as a weapon of spite against educators and public employees.
The budget that emerged from the Senate slashes teachers’ retirement and public education, from pre-school to grad school. It weakens the merit system for state employees and threatens tenure for university professors.
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If the Republicans who control the Senate think that Kentucky would be better off without longstanding protections against political interference in state and university personnel decisions, they should make that case in a public debate.
Instead, they tucked a sentence or two into a 178-page budget bill on the 53rd day of a 60-day session. Guess what? These threats to their security alarmed career civil servants and university faculty who will no doubt voice those concerns to lawmakers this weekend.
Excluding stakeholders and the public from important decisions has been a recurring theme for Senate leaders. They developed their No. 1 priority in secret, which is one reason Senate Bill 1, a prescription to cure underfunded pensions with billions in benefit cuts, foundered on Republican opposition.
SB 1 had problems besides teachers’ ardent opposition; its benefit cuts would have been challenged in court and probably ruled illegal. Still, it’s hard to see the Senate’s move to shortchange the Teachers Retirement System during the next two years as anything but retaliation against teachers for their effective protests.
Senate Republicans shifted $1.1 billion that both Republican Gov. Matt Bevin and the Republican House put into teachers’ retirement into the two worst-funded pension funds, for state employees and state police. Those plans are funded, respectively, at 14 percent and 27 percent of what’s needed for future obligations. Senate budget committee co-chair Chris McDaniel said that a stock market correction would wipe out the state police system while the teachers’ plan, which is 56 percent funded, could weather a downturn.
While beefing up the worst-funded plans has appeal, what’s most imperative is funding all the plans at the level that actuaries calculate is required to meet future obligations: the actuarially required contribution, or ARC. If the legislature makes all the ARCs, even the worst-funded plans could cover obligations without selling off assets in a down market.
Both Bevin and the House funded the full ARCs for all public-employee plans. The Senate plan funds teacher retirement far below what the actuaries require, pushing it toward insolvency and repeating mistakes of the past. The Senate funds the other two plans far above their ARCs.
Republicans’ most compelling plea — that Bevin, unlike the last three governors, has budgeted full funding because Republicans want to save pensions — is ruined by the Senate’s shortchanging teachers’ retirement.
The Senate did cobble together money to shield public schools from the steep cuts in transportation that Bevin recommended, but provided little else to cheer.
Barring a breakthrough, lawmakers seem likely go home again without modernizing the tax code to meet Kentucky’s needs. They should at least refrain from petty actions that would deepen divisions and make progress even harder.