September 2, 2014

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Legislative perspective on Kentucky General Assembly

Long before this year’s legislative session began, my colleagues in the House and Senate and I knew the biggest task before us would be putting the retirement systems for state and local governments on firmer financial ground.

These systems were doing extremely well as recently as a decade ago, but the country’s two recessions since then have hit them especially hard, much as they have shrunk the state’s budget, which has been cut $1.6 billion over the last five years.

It is best to think of this situation like a balloon mortgage.  In other words, if we do nothing now, state and local governments could face a severe financial crisis just a few years down the road.  The sooner we act, then, the less likely that will be, especially as the stock market continues its upward trend.

Last Wednesday, the House voted for a plan that provides a viable way forward.  It does not raise any taxes, and it does not lower benefits public retirees and employees have earned.  It also would help the state meet its full payments to the retirement system every year.