Speaking with the media at a Grow with Google event in Louisville on Thursday, Gov. Matt Bevin said that Senate Bill 66 — which lowers upcoming dramatic increases to the pension costs of local governments — should not pass in the closing days of the Kentucky General Assembly, as “it’s a bad bill.”
Bevin made these comments while standing next to Louisville Mayor Greg Fischer, who warned two weeks ago that it is critical for local governments like Louisville that SB 66 passes, as its failure would create a $50 million budget deficit for the city and necessitate “draconian” cuts to vital government services.
Asked by Insider Louisville if the two had spoken about SB 66, Fischer passed off the question to Bevin, who promptly panned both its content and chances of passage.
“I don’t think Senate Bill 66 is going anywhere, nor should it,” said Bevin. “It’s a bad bill.”
The governor’s comments echoed his sentiments about SB 66 on Tuesday, when he said “I would never sign that bill,” as it is “nothing but a kick down the road” in dealing with the massive unfunded liabilities of Kentucky’s public pension system.
Senate Bill 66 would cap the annual increases in pension costs for local government and school district employers to 12 percent over the next 10 years, allowing them to phase in massive increases for the coming fiscal year, as the Kentucky Retirement Systems instituted more conservative assumptions on investment returns and growth.
While SB 66 appeared likely to pass earlier in the session, Republican leaders of both the Senate and House have stated that its fate now remains in doubt if the larger comprehensive pension bill for government workers and teachers — Senate Bill 1 — does not pass. With the chances of SB 1 passing in this session plummeting in recent weeks, several have said that SB 66 is inextricably linked to it and will not be passed on its own. Some Democratic legislators and local government advocates said this amounted to holding SB 66 hostage in order to provide political leverage for SB 1.
Thursday afternoon, Republicans unveiled an amended SB 1 — altering the pension benefits of new teachers — and voted it out of committee after tacking it to an unrelated bill dealing with wastewater services, sending it to the House floor over the objections of Democrats who said they had not been given time to read the bill or provided its actuarial analysis.
Asked later at the Google event about Bevin’s comments, Fischer told Insider that he hopes for a grand compromise in the final days of the session, which includes pension reform, tax reform and a two-year budget that doesn’t cut needed services — citing the same “three-legged stool” comment from Sen. Chris McDaniel, R-Taylor Mill, on Wednesday about the possibility of a last-second deal in Frankfort.
“To have a budget that meets the needs of our citizens — including pensions — you have to have revenue,” said Fischer. “So I think any business person would look at the expense side and the revenue side … There’s going to be a lot of people that will be upset with the type of defunding they’re talking about right now, and the legislators know that. So I think they’re trying to figure out how they can pull all of this stuff together. I hope they do.”
The two-year budget passed by the House earlier in the session included tax increases on tobacco and prescription opioids, but the Senate version stripped them out. Conference committees in Frankfort continue to work on a compromise that can be passed by both chambers in the remaining three days of the session.
While Fischer cited a possible $50 million hole to Louisville Metro Government’s next budget if SB 66 is not passed, he added that in the most extreme case “our city could be hurt by almost $75 million. So that would be a huge impact on services here in Louisville … That’s draconian cuts we’d have to make, and I trust our legislators know that.”