FRANKFORT — Local officials told state lawmakers they want more control over the way they raise money to fund their governments and they are willing to take responsibility for the “inviolable contract” guaranteeing their employees pension benefits if lawmakers allow them to split off from the state employee pension system.
Led by the Kentucky League of Cities and the Kentucky Association of Counties, many local elected officials want pension reform to include the separation of the County Employee Retirement System (CERS) from the Kentucky Employee Retirement System (KERS).
CERS is relatively better funded than the KERS plan because county officials have consistently made the annually required contribution (or ARC) to CERS while the legislature has in several past budget cycles appropriated less than required. (Lawmakers, however, contend they appropriated the recommended level in multiple governors’ budget requests — although most agree now those recommended amounts were inadequate.)
The draft pension reform bill released last month by Gov. Matt Bevin and legislative leaders keeps the two systems together and Bevin has said it isn’t fiscally wise to separate them.
But LaRue County Judge-Executive Tommy Turner told the Interim Joint Committee on Local Government Wednesday local officials “still hope for the separation of KERS and CERS.”
And Vince Lang, Executive Director of the Kentucky County Judge-Executives Association, told the committee that if lawmakers allow cities and counties to manage their retirement system, “I think it is our responsibility and it should be our responsibility and not the commonwealth’s.”
Turner said if the state doesn’t approve the separation, any increase in required contributions from city and county governments “should be (implemented) over time so counties can adjust their budgets.”
Richmond Mayor Jim Barnes, who is the current President of Kentucky League of Cities, also listed separation of the state and local pension systems as KLC’s top priority, asking lawmakers to “allow us to manage our self-funded pension fund.”
Barnes also said KLC wants cities to receive a larger percentage of local road funds, allow all cities to impose a restaurant tax and to cut back on unfunded mandates — activities required by the legislature but without any funding.
Teresa Rochetti-Cantrell, Mayor of Maysville, said one of those she wants to end is a requirement that ordinances, bids and other public announcements must be published in the local newspaper of record. She said her city can save significant money by publishing such announcements online.
Some of those testifying Wednesday said they support tax reform, but they said such reform should include more local control or “home rule” for local governments to raise tax revenue, including the ability to enact a local option 1-cent sales tax for infrastructure projects.
Mack Bushart, executive director of the Property Valuation Administrators Association, reminded lawmakers that PVAs collect millions in state property taxes, yet their funding has been reduced as part of recent budget cuts.
He suggested the state increase the state property tax by 2.5 cents and use that additional revenue to fund PVA offices around the state.
The 2018 General Assembly convenes in January, confronting a strapped budget with or without pension reform. Bevin wants them to address pension reform in a special session before the end of 2017 but so far House Republicans haven’t been able to agree on a pension bill.
Bevin says without pension reform other state services and programs, including education, could face double digit funding cuts as the pension systems siphon off greater and greater appropriations to stay afloat.
Committee Chairman Sen. Joe Bowen, R-Owensboro, echoed that statement Wednesday.
“Without pension reform,” Bowen told the local officials, “we can’t identify the additional revenues you desperately need.”
Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at firstname.lastname@example.org. Follow him on Twitter @cnhifrankfort.