COMMENTARY: Politicians' Predictable Pension Punt
By Jim Waters, Bluegrass Institute
LEXINGTON, KY - Frankfort Politicians’ Predictable Pension Punt - By Jim Waters
In football terminology, the difference between true – and desperately needed – pension reform in Kentucky and what we actually got from self-serving politicians during this legislative session is the difference between a game-winning field goal and a wobbly dud punted by a bench-warmer with two left feet.
Of course, fans would jeer at any professional football player who tried to convince them that a shaky punt was anywhere near splitting the uprights for the win.
Yet Frankfort politicians who do know the difference were so starved to score political points with a citizenry increasingly impatient over the commonwealth’s out-of-control pension system that they actually had the gall to claim they changed history.
“History will remember what we did here during the 2013 session of the General Assembly,” Sen. Damon Thayer, R-Georgetown, said about the passage of Senate Bill 2 on the final day of the session. The legislation raises taxes, snatches road money and guarantees a 4-percent return on state workers’ invested retirement funds.
It may be history in the making, but not the kind Thayer is talking about.
Wasn’t it only five short years ago that claims about how Kentucky had reformed its pension system echoed in Frankfort’s hollow halls? Why, yes! Yes, it was!
On June 27, 2008, then-House Speaker Jody Richards, D-Bowling Green, called legislation tinkering around the edges of the pension system “a giant leap in the direction of long-term financial stability” while also claiming that “the effects of these major structural reforms will be immediate and far-reaching” and “that the structural changes we’re making will prevent the system from going bankrupt.”
Since that year, the pension hole has gotten around $4 billion deeper as the unfunded liabilities of Kentucky’s six pension plans grew from $29.7 billion in 2007 to $33.7 billion today. Also during that time, the Kentucky Employees Retirement System for state workers – the largest of the plans – has gone from 40 percent funded to less than 27 percent today.
Still, we continue to hear the same kind of political sweet-talk about how both parties came together to and worked in a bipartisan fashion to solve the problem, and – blah, blah blah.
Gov. Beshear’s approach has been more like that of a termite in a yo-yo than a state’s chief executive providing leadership from the bully pulpit. But hey, he and his fellow politicos demonstrated great political savvy on this punt – even if it was a woefully short one.
Beshear just recently scolded critics for not being patient enough to allow the 24 years needed for the 2008 reforms to work. Now, incredulously, he claims that SB 2 “solves … our monstrous pension liability and the financial instability of our pension fund.”
Which is it, governor?
Western Kentucky University professor Brian Strow, Ph.D., notes a total of $1.1 billion per year is needed just to slow the commonwealth’s financial bleeding.
“To wit, the state needs an extra $1.1 billion per year to stop increasing unfunded health and pension liability in the state, and their solution was to raise $100 million a year in new revenue?” Strow asked. “So they solved less than 10 percent of the problem, and this is the greatest piece of legislation the legislature has passed in years?”
Just as the NFL outlaws egregious helmet hits, shouldn’t there be some way to suppress Kentucky’s elected officials’ exaggerated claims about alleged pension reform bills that serve only as a smoke screen?
“Is the pension crisis in Kentucky solved? Hardly,” Strow said. “Do state politicians consider it solved? Absolutely. That’s what they also thought in 2008.”
But doesn’t that make it so?
Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at firstname.lastname@example.org. Read previously published columns at www.freedomkentucky.org/bluegrassbeacon.