This commentary signed by Kentucky Chamber of Commerce President and CEO Dave Adkisson, Commerce Lexington President and CEO Bob Quick; Greater Louisville, Inc. President and CEO Kent Oyler Northern Kentucky Chamber of Commerce President and CEO Brent Cooper Kentucky Business Community.
With a major pension reform bill moving through the legislative process, we write on behalf of Kentucky’s business community in strong support of the basic provisions of Senate Bill 1 and commend our state leaders for addressing this issue that has long plagued our state.
Kentucky has one of the worst funded public employee pension systems in the country. In other words, the state doesn’t have enough money set aside to pay for the promises we’ve made to our public employees.
The total unfunded liabilities range from $40 billion to $60 billion, an amount that is four to six times the size of Kentucky’s annual General Fund budget.
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Businesses looking to locate new operations want to be confident the state’s fiscal house is in order and our state has favorable financial ratings. This pension crisis and our lower bond ratings are impacting our ability to attract companies and create new jobs.
The time is now to put the pension systems on a sustainable track. Every year that passes without significant changes simply kicks the can down the road and increases the chance that taxpayers will be asked to pay more to make the system solvent in the years ahead.
Without reform, we will soon see drastic cuts to education, transportation, public safety — all of which are critical to the business community and to all Kentuckians. The business community is encouraged by structural reforms put forth in SB1, many of which our chambers of commerce have advocated for several years, including ensuring a disciplined approach to requiring responsible payments into the pension systems, recognizing the financial stress on the systems caused by people living longer on average than when the systems were created, and lessening the large financial burden of the systems’ liabilities being placed solely on taxpayers.
The bill would create greater consistency across all of Kentucky’s retirement plans and keep promises made to state workers. There is no easy solution. We can’t simply tax our way out of this problem; changes to the structure of retirement benefits are required. The reality is that failing to act now by making the tough choices and bringing all sides to the table to compromise will mean even tougher choices in the future.
Adjusting to the financial reality our state faces will cause drastic stress on our state government, our schools, our cities and our counties. We commend the legislature for addressing the increased costs for cities and counties by providing a phase-in of how those costs will be paid. Our businesses will be at risk if their local payroll and property taxes must be increased to offset drastic increases in pension costs for our cities and counties.
The business community has been calling for significant reforms to Kentucky’s pension systems for over a decade, and we commend Gov.Matt Bevin, Acting Speaker of the House David Osborne, Senate President Robert Stivers and bill sponsor Sen. Joe Bowen for working with countless stakeholders to put Kentucky’s pension systems on a sustainable path while still honoring the commonwealth’s promises to public employees and retirees.