Pension reform still possible?

Governor Beshear had a meeting with leaders of the legislature this morning about pension reform. There is a move afoot to have a special session to get this done.

I certainly hope this happens. We are well past the time to make some changes on this topic. My only complaint is that it may not go far enough. The proposal includes more study of the already most studied issue in Frankfort. But, progress is progress. Below is the release from the Governor:

Gov. Beshear Proposes Pension Reform Measures – Will Save $500 Million Annually in Pension Costs and at Least $50 Million in Immediate Savings to City and County Governments and School Districts

Proposes Special Session Last Week of June; Creates Working Group to Address Remaining Issues

FRANKFORT, Ky. (May 29, 2008)—Gov. Steve Beshear today called on legislators to agree on major pension reform issues in the next three weeks which will save taxpayers $500 million annually and city and county governments and school districts at least $50 million immediately. If such an agreement can be reached, the Governor said he would call a special legislative session to enact the reforms before June 30, the end of the current fiscal year.

“Democrats and Republicans, public employees and public employers, we all agree that the state’s public pension problem is a real mess,” said Gov. Beshear. “And, we all agree that the failure to pass meaningful pension reform during the last legislative session has made the problem worse. And, most significantly, we all agree that we must act now to stop the bleeding of taxpayer dollars.”

During the last session, the House and Senate passed separate bills, many provisions of which were strikingly similar. Key issues that remain in dispute are governance of the systems and consideration of new models for future benefits, issues that have not been fully vetted and did not receive any recommendation from former Governor Fletcher’s Blue Ribbon Commission.

Gov. Beshear’s staff compiled all of the provisions of the two pension bills from the 2008 session that used the same language or shared principles.

“The draft language represents issues where there is substantial agreement between both Houses,” said the Governor. “In addition, this draft contains the recommendations of Governor Fletcher’s Blue Ribbon Commission.

Those recommendations include:
Raising retirement ages for future hires;
Lowering the cost of living adjustment to 1.5 percent;
Requiring new employees to contribute 1 percent of their salary to the health insurance fund; and
Reforming the practice of double-dipping.

Gov. Beshear met with House and Senate leaders this morning to provide the draft language and urged them to reach agreement on these core components in the next three weeks. If they agree, he will call a special session the week of June 23 to take up this compromise bill.

“Agreement on these reforms will result in savings of nearly $500 million annually to state and local government obligations to fund the pension system,” said Gov. Beshear. “It will also provide city and county governments and school districts with at least $50 million in immediate savings starting July 1.”

Gov. Beshear also emphasized that the state will realize a record number of retirees this year, and a failure to reform the practice of “double dipping” could impose significant additional costs on the state.

“It’s time to set aside issues that divide us, to identify all of the significant things we agree on, and work together to come up with a partial, but substantial solution to the pension mess we are in,” said Gov. Beshear. “We all agree there is a problem. We agree the problem is getting worse. We agree the time is now. And we agree on the basic changes that need to be made. Let’s get it done, now.”

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The long story of a road

Here is the story of Industrial Road, its expansion, and where it is on the 6 year plan.

As I write this, work is being done to improve and widen Industrial Road from US 42 to US 25. That is Phase 1. Phase 2 expands and widens Industrial Road from US 25 to Turkeyfoot Road. Last year, Phase 2 was on the 6 year plan. This is important because a road cannot be funded unless it is on the 6 year plan.

Now in the Governor's first version of the 6 year road plan Phase 2 was removed. I made getting Phase 2 back on the 6 year plan this year a top priority for several reasons. First, I knew the chances of new roads being put on the 6 year plan was next to zero. Second, the cities of Elsmere and Independence and Kenton County each put up $100,000 for a local match to help the project along. Well, that money has been spent on Phase 1 (which is in none of those jurisdictions). It is unfair that their money is spent outside their areas and the part in their area is gone from the list.

I had the opportunity to share this with the Governor. I believe he interceded on my behalf to get it in the House version of the 6 year road plan because it was in there.

So then of course the budget goes to the Senate. In the Senate, Phase 2 came out, along with every other project the house added in their version. I don't blame the Senate, they treated every new project equally, it got cut out. Later, I was hopeful that Phase 2 would reappear in after the conference committee. That did not happen as again no new projects came out of the conference committee. So I thought it would be out for at least two years.

This is one of the more interesting things about this job, nothing is ever certain. Today the Governor vetoed HB 79, the biannual Highway Plan. Here is his statement:

FRANKFORT, KY (April 28, 2008) – Gov. Steve Beshear today vetoed House Bill 79, the Legislature’s version of a highway construction plan, citing the unprecedented manner in which it would have constrained his administration in the coming biennium.

“This legislation unnecessarily limits the ability of the Transportation Cabinet to make the kind of adjustments that are always necessary when implementing hundreds of road and bridge projects,” the Governor said.

In his veto message, the Governor said HB 79 would have severely limited the Transportation Cabinet’s ability to deal with project cost overruns.

“Without this veto, some critical projects may have to sit idle because the actual costs could exceed the amounts set forth in the bill,” he said. Adding to that untenable position, no change to the highway plan, no matter how badly needed, could be made without new legislation.

The Governor said he had directed Transportation Secretary Joe Prather to publish the Commonwealth’s highway plan combining all the projects he originally recommended with projects the Senate and the House added in their respective budget memorandums. In that way, all such projects can be considered for funding.

The state road plan will “provide maximum flexibility for the maintenance and the construction of the Commonwealth’s transportation infrastructure and maintain consistency with past practices,” the Governor said.

The plan also will contain a number of needed projects inexplicably omitted in HB 79. A listing of those projects will be made available when the replacement plan is published.

“There will not be enough funds available to move forward with every project included in the substitute plan,” Beshear added. “However, including them in the plan signifies their importance to me and my desire to move forward with them when funds become available.”

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The way I read this, it looks like Phase 2 will be back in. I am going to try to confirm this.

I thought we were broke

On the heels of the Governor's budget address where an "austere" budget was proposed, some money was spent on Thursday. $2.6 million was spent by the Governor in Middlesboro in Bell County. Now apparently most road projects are on hold, but we can spend money on helping a telephone company.

Now first, I don't begrudge the people of Bell County their opportunity to improve their lot in life. They are very nice people and live in a beautiful part of the world. Second, maybe this money must be spent in a certain way. But even if that is true, spening it right now in a county that has a special election in 5 days, after pleading poverty 2 days prior, is a little suspect and sends the wrong message in my view.

Governor's budget address

Here are some thoughts and highlights from the Governor's budget address given Tuesday night:

The Governor indicated that there would be no money taken away from the SEEK formula for K-12. That is something I can support. However, according to Mark Hebert from WHAS 11, that is not entirely true.

Regarding postsecondary education, the Governor cut higher ed about 9%. He said need based scholarship money would stay the same, but KEES money would be cut back.

On health care, said that this would have the largest amount of new funding. Also supported bonds for the Glasgow Nursing Home. I suppose this means that the state is in the nursing home business. That should not surprise me. But it does beg the question, why are we in that business. Maybe in these tight times we should examine the possiblity of getting out of it.

No cuts in Agriculture and Coal Severance programs.

He uses most of the rainy day fund.

My favorite part, he cut in half the reliance on one time money, something the state needs to get away from.

But in the end, this just a starting point. The House will now create their version, and the Senate will do the same.

Budget address

Tonight is the Governor's budget address. You can watch it on KET at 7:00.

I am looking forward to seeing what the Governor recommends regarding getting out of the deficit that is looming. Rumor is that everyone is going to get the ax.

One disappointment is that all House Republicans were supposed to get briefed on the speech at 3:00 today, but the "rank and file" have been essentially kicked out, and only our leadership will be briefed. Sad, but the way things run down here.

Plodding along

We are moving along slowly right now, passing about 2 to 4 bills a day. That is not too bad, I think things are moving quicker than they did last year. I am told that things will kick into high gear next week. Tuesday is the filing deadline, so everyone knows what they are up against. Then Tuesday night is the Governor's budget address, where we expect to learn the plan for the budget, and for the pension fix.

Meeting with the Governor

Has the chance to meet with the Governor for 5 minuted yesterday in his office. Nothing earth shattering happened, just basically a get to know one another session. Governor Beshear has stated he has an open door policy, and so far it is true.

The State of the Commonwealth address

Last night was the State of the Commonwealth address, given by Governor Beshear. Overall it was a good speech, very similar to the themes laid out in his inaugural address. The speech was short, which we appreciate. It was long on specifics and short on substance. It is my understanding that the specifics will be laid out in the budget address on January 29th.

My favorite part of the speech was when the Governor said that the status quo is no longer acceptable. I could not agree more with that statement. Of course, my vision of what needs to change and the Governor's vision may be completely different. But I am glad that he is open to change.

How else can we solve budget problems?

Gov. Beshear has implemented a 3% across the board cut for much of state government in order to balance the budget. Something has to be done and he has had to make some difficult decisions already. Tough decisions come with the lofty position he now holds and I am glad that he has shown the backbone to make some.

But what else can be done. As I stated in an earlier post, repealing the prevailing wage law would help. Take NKU for instance. NKU has to cut $1.6 million in this budget year. This on the heels of building the Bank of Kentucky Center, a $64 million project. Because of the prevailing wage law, the project cost about $4-6 million more than it would have otherwise. That is our tax money being spent on inflated salaries.

So what could we do with $4-6 million dollars? Well, that would cover the shortfall for NKU, as well as Morehead State University, and possibly Western Kentucky University. All from one project. Imagine the money that could be saved if we eliminated prevailing wage from all public projects.

Inauguration Day

I attended the Inauguration on Tuesday. It is always nice to see the peaceful transfer of power at every level of government, and Tuesday was no exception. I had the chance, albeit brief, to introduce myself to the new Governor. Gov. Beshear said it was great to meet me and he would like to sit down together sometime. Hopefully we will have the chance to do that eventually, probably in January. Of course, he probably met about 1000 people that night, therefore our conversation may not be at the forefront of his mind. But I am sure eventually we can schedule 15 minutes to get to know each other.

The Governor's speech focused on broad themes instead of specific proposals, with one exception, ethics. There was many references to bipartisanship. I look forward to seeing that in action. Although the new Governor and I are bound to disagree on some items, I stand ready to work together on what we agree on to benefit the people of the 69th District.