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State Senators Julie Raque Adams and Morgan McGarvey of Louisville will file a proposed amendment to the state constitution on Tuesday that would expand gaming in Kentucky, with most of that revenue directed toward the state’s troubled public pension system.

The amendment — which would have to be approved by a supermajority in each chamber, and then by voters in a referendum this November — would dedicate 90 percent of the revenue raised in the first 10 years to the Kentucky Teachers’ Retirement System and the Kentucky Employees Retirement System, with the remaining 10 percent going toward the horse racing industry. KTRS currently has the lowest funding ratio of any teachers’ plan in the country, and the Kentucky Employees Retirement System is the worst-funded of any public pension plan in the country — with a combined unfunded liability of over $30 billion.

In a press release Tuesday morning, Greater Louisville Inc. offered its full support of the legislation, saying it would be a catalyst for economic growth and prevent money from fleeing to neighboring states that have casinos.

“Every year the Commonwealth continues to see hundreds of millions of dollars flow across state lines in gaming revenue: $546 million to be exact,” said GLI President and CEO Kent Oyler. “These are dollars that could be going toward our state deficit and our significant pension obligations.”

Expanded gaming was one of the top priorities for outgoing Gov. Steve Beshear over his two terms, and despite broad bipartisan support for the concept among the public and state legislators, such legislation was never passed by the Kentucky General Assembly. During most sessions, a conflict arose among legislators and various interest groups on how many casinos would be allowed, where they would be located, and how much of the revenue would be directed toward the horse racing industry.

Sen. McGarvey, D-Louisville, told IL that such conflict should not impede his bill, noting that it has bipartisan sponsorship with the Republican Sen. Adams, and it simply lets Kentuckians vote on whether they want gaming revenue to go toward pensions and the horse racing industry. If the referendum is successful this fall, the General Assembly in 2017 can get into the minutia of how many casinos are approved, where they are located, and how taxation is specifically implemented and allocated.

“If we come back here as a legislature (in 2017) and the debate is no longer on whether or not we should have casino gaming, then we’ll get somewhere on crafting responsible enabling legislation,” said McGarvey. “I think doing the enabling legislation and asking the question of whether or not we want casino gaming at the same time is part of the reason it’s stalled.”

As for public pensions, the General Assembly is now discussing the new budget proposal of Gov. Matt Bevin, which directs more General Fund dollars toward KTRS and KERS than in past years, along with a dedicated pool of funds from surpluses and legal settlements that would be directed to those pension plans. Most experts agree the state’s current pension crisis is due to Frankfort allocating far less than the actuarially required contribution to those plans over the last decade.

McGarvey adds that the current budget crunch and the dire circumstances of public pensions should mean that the chances expanded gaming passing are better than ever.

“We’re coming off $1.7 billion in cuts over the 8 years of the Beshear administration, and we’re facing $650 million in proposed cuts from the Bevin administration,” said McGarvey. “The legislators are aware of the fact that we have a three-alarm fire with the unfunded liability of the pension systems right now. This is a way that we can get revenue into the state budget without raising taxes.”

Asked if Kentucky’s powerful horse industry will balk at his legislation considering that it would only receive 10 percent of new gaming revenues — much less than some of the previous expanded gaming proposals — McGarvey said that “I hope the horse industry recognizes we’re trying to do a bill that’s going to benefit the most number of Kentuckians in the best possible way.”

Noting estimates that Kentucky loses $546 million in revenue from Kentuckians going to casinos in neighboring states, McGarvey added that his amendment would keep that money here at home.

“We are losing money every single day that is going across the river to pay for better roads and better bridges and better schools in Ohio and Indiana,” said McGarvey. “And this is just way to ask the people of Kentucky, ‘do you want to get this revenue back?’ If they say no, the good news is that this forces us onto the next issue. This is not a permanent fix, but this is just a tool we should have in our toolbox.”

Joe Sonka is a staff writer at Insider Louisville focusing on government, politics, education and public safety. He is a former news editor and staff writer at LEO Weekly and has also freelanced for The Nation and ThinkProgress. He has won first place awards from the Louisville Metro chapter of the Society of Professional Journalists in the categories of Health Reporting, Enterprise Reporting, Government/Politics, Minority/Women’s Affairs Reporting, Continuing Coverage and Best Blog. Email him at [email protected]


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