Kentucky legislative leaders have reached agreement on a plan aimed at shoring up the state's underfunded pension systems, staving off the need for a special session of the General Assembly.
The new plan would reduce a personal tax credit of $20 to $10, generating roughly 33 million in revenue that would go to General Fund, but lawmakers would use for pensions. It would also use revenue from technical changes in the state's tax code, as well as money from federal tax changes.
Overall, the plan would generate $96 million in the 2015 fiscal year and $100 million in 2016 fiscal year.
A House bill aiming to help generate revenues for the underfunded pension system is in legal limbo as the Senate refused to accept the bill.
House Bill 416 takes revenues from expansion of Instant Racing and online lottery sales and the start of a Keno game to generate close to $100 million a year to pay into state's currently underfunded pensions for state employees.
Revenue bills in odd-year sessions must have 60 House votes in final passage to be considered within the rules; House Bill 416 only received 52 on the floor. Because of that, the Senate clerk refused to accept the bill.
But House Speaker Greg Stumbo says the Senate should amend the bill and send it back to the House for final passage if it wants to avoid a special session.
Legislative pension reform is progressing through the Kentucky General Assembly. Senate Bill 7 would keep new legislators from participating in the Kentucky Employees Retirement System. It is aimed at preventing the addition of new burdens to Kentucky's pension system, despite the fact that legislator's pensions are generally well-funded.
Senate President Robert Stivers praised the bipartisan effort in his chamber to solve Kentucky's underfunded pension problem.
The House has narrowly passed two bills dealing with the state's underfunded pension system, but not without controversy.
The House passed an amended version of Senate Bill 2, which keeps the pension systems as a defined benefit and creates a new oversight panel for Kentucky's many pension plans. It passed on party lines 55-45, with Democrats favoring.
The House budget committee has passed a bill that would help shore up the state's underfunded pension system. House Bill 416 would take revenues from expanding Kentucky lottery sales and online games, as well as from Instant Racing if the state Supreme Court upholds the legality of the game.
House Speaker Greg Stumbo says the bill would generate at least $100 million a year to be put into a trust fund for pensions. And he says using money from lottery sales won't hurt scholarship funds tied to lottery profits.
"Those are left harmless, they'll still be funded. And they'll be allowed 2 percent growth in this proposal so they'll still continue to grow," Stumbo said.