By Mike Moore
2:16 PM EST, January 4, 2013
Kentucky lawmakers will have much to digest during the 2013 short session of the General Assembly, which will kick off Tuesday.
The state’s pension fund and its $30 billion shortfall is at the top of the “to do” list, said state Sen. Tom Buford, R-Nicholasville.
“We’re looking at a $30 billion unfunded liability. That means if everyone should retire today, that would be the worst case scenario,” Buford said.
Buford said in order for the state to make up the liability, legislators must find a way to earmark funds into the system.
“There has been some thought that we need to place in $300 million (each year),” Buford said. “But a new analysis of what we call the ARC (Actual Required Contribution) — that is the amount of money we should get there to protect ourselves annually — is coming close now to $165 million. That's what we should be putting in annually to make up our deficit for about a 10- or 15-year period.”
Buford supports putting between $125 million and $165 million into the ARC to make sure the state is covered.
The senator said the General Assembly has historically underfunded the pension system, and that, coupled with automatic cost-of-living increases and the weakened economy has caused problems with its funding. Additionally, 53 percent of the issue is the cost of health care, Buford said.
“That's something that we, along with the other 49 states, have found impossible to control,” he said.
The senator also prefiled Bill Request 99, which calls for closing the legislators’ retirement plan to new members who take office on or after Aug. 1, 2013.
“I'm going to say after Aug. 1, 2013, there will be no legislative retirement plan, period, for legislators coming in,” Buford said. “I know that I cannot affect current legislators because there is a binding contract, and it’s been ruled on by the courts, that says I cannot destroy someone’s pension plan that they already have the terms agreed to.”
Buford’s reasoning is that state senators and representatives are part-time positions, and he said providing a pension was “ludicrous.”
“There are many individuals who work full time at their employers and they don't get a pension,” he said. “So why should the taxpayer have to pay for a state representative or a state senator to gain a retirement? These retirements have become extremely lucrative.
“For example, if (state Rep.) Bob Damron and I would retire today, our retirement pension would be greater than our salary. And that is just horrible.”
Buford said in the grand scheme of things, the legislators’ pension plan is a drop in the bucket in the overall state retirement system, but cutting out the pension for part-time elected state officials would help.
“Pension to legislators is not a huge cost to the state, because there's very few of them,” Buford said. “Most of them don't survive in their terms long enough to draw much of a pension, if any. And many of them die shortly after they leave office.”
Buford said if the measure makes it to the Senate floor for a vote, he’s confident it would pass.
Additionally, Buford said he would like to look at state senators and representatives receiving health insurance through the state.
“I would like to take another step forward and deal with insurance for these part-time employees,” he said. “They should be working at home, and they should have their own means to provide (health insurance), and taxpayers should not have to pay that. But it’s baby steps first. I know I couldn’t get the full loaf of bread, but if I could get a heel or two, I'll take it.”
Gov. Steve Beshear’s tax-reform plan will also be a hot topic of discussion during the 30-day session, Buford said.
The governor created a Blue Ribbon Tax Commission in February 2012 for the purpose of looking at the state’s tax code and recommending ways to reform it.
In December, the commission released a 435-page report with 54 approved recommendations in it.Beshear and other lawmakers have said they want to begin implementing the recommendations in the 2013 legislative session.
But Buford said he doesn’t think tax reforms will be addressed during the 30-day session. Instead, he believes the governor will call a special session to address it.
“I don't know that in the 2013 session that there is enough time to deal with this,” Buford said.
If legislators were to pass the commission’s recommendations, it would increase revenue by nearly $659 million every year.
Buford said the tax reforms revolve around services such as automobile repair and purchase of a newspaper.
One reason Buford said it would be difficult to pass tax reforms is the short-session rules.
“In this 30-day session, a tax increase would require a super majority (two-thirds) of each chamber, which makes it highly unlikely that tax reform will be accomplished in this session,” Buford said.
Statewide smoking ban
Another topic of discussion in Frankfort will be the idea of a statewide smoking ban. Buford feels discussions will take place, but in the end, the topic will be pushed to the 2014 session.
“I don’t think that a statewide smoking ban will come from this session,” Buford said. “The legislation will start in the House of Representatives, and it will be quite interesting how it matures down there.”
A statewide smoking ban would affect public places such as restaurants.
Buford also said a statewide ban could adversely affect local governments who already have bans in place.
“Some cities that currently have smoking bans, this may weaken their particular issues,” Buford said. “Some of them don't allow smoking out on the street in front of the restaurants and on the sidewalks, so it could undermine some of the local smoking bans that have been passed statewide already.”
Buford also expects education issues such as the school dropout age to be tossed around by the General Assembly.
“It’s still a concern for the governor, and I think that the House Democrats will try again to pass the bill raising the dropout age to 18,” Buford said.
Currently, the dropout age is set at 16.
Juvenile-justice reforms may also make their way to the forefront, Buford said.
“It seems like leaders in both parties are coming around to realize that placing teens in detention centers for these nonviolent offenses is pretty costly, and it can be counterproductive,” he said. “They get blended in with a group of individuals and it leads to probably more problems.”
Buford said underage problems such as drinking, smoking and skipping school have also directly or indirectly led to juveniles being taken to detention centers.
“We are looking into ways to find a better solution for this, and I think some of these ideas could surface in this session,” Buford said.