February 11, 2016

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Q & A with Senate Majority Leader Damon Thayer: Pension reform tops agenda

Published 10:35 am Monday, February 4, 2013

With the 2013 legislative session set to resume Tuesday, The State Journal met with Senate Majority Leader Damon Thayer on Thursday for an editorial roundtable.

During the legislative interim, the Georgetown Republican co-chaired a bipartisan public pension task force, which recommended numerous changes to Kentuckys pension systems for future state and municipal employees, legislators and judges.

The task force also proposed fully paying actuarially required contributions to the Kentucky Retirement Systems, which faces unfunded pension liabilities totaling $18.1 billion.

Thayer plans to file the task force proposals Tuesday as Senate Bill 2, which is expected to reach the Senate floor for a vote about a week after its filed.

Here are edited responses Thayer gave to questions from The State Journal during the interview:

The State Journal: Do you think the issue of tax reform should be resolved before the General Assembly tackles pension reform?

Sen. Damon Thayer: I think its actually the other way around, because we have on the table a bipartisan consensus compromise solution on the pension issue, and I think weve laid the groundwork with the members of the Senate and even starting in the House.

I think the big issue with pension reform is we cant really afford to wait any longer. Frankly, weve waited long enough.

I think the reason youre suggesting we do tax reform first is because you think there is a revenue shortfall that we need to fill the gap in the unfunded liability that weve recommended we do by immediately fully funding the actuarially required contribution.

The truth is that is a funding decision that we will and should make during the normal course of the budget, which we will not take up until the biennial budget in 2014.

Our position is we need to pass all these other reforms, including the language that is the intent for the General Assembly to fully fund the ARC (actuarially required contribution).

Q: Are you getting a lot of pushback on the proposal to move from a defined benefit pension program to a hybrid cash balance plan?

A: No, not really. There seems to be a little bit of pushback on the (cost-of-living adjustments), but what Im getting from most state employees is, Save my retirement.

And I think most state employees understand that not having a COLA (cost of living adjustment) for a while is pretty likely, and I think they understand that we cant keep having a defined benefit pension plan if we want to stop digging the hole.

Because of the situation with the pension unfunded liability and the fact that were still in a rough economy, its pretty unlikely that we can afford COLAs for the near future. Whats more important is that we try to get as much cash into the pension system as possible.

So our choice with the COLA is every two years we take the negative action of suspending the COLA for that biennium, or we strike the COLA language from the statues altogether once when we do overall pension reform, and then somewhere in the future, a future General Assembly, when things are better, can take the positive action of reinstating the COLA.

Q: How has the atmosphere been in the Senate since the 2013 session began?

A: The atmosphere is really good and very different. It feels less tense, and I think our efforts to work with the Democratic minority in the Senate have been well received on both sides.

We had an unprecedented luncheon where all members of the Senate and both the Democrat staff and the Republican staff got in a room, and we had lunch and we cracked jokes at each others expense.

The governor came over with some of his staff and stayed around for about half an hour, and then that night the governor invited the 16 members of leadership House, Senate, Democrat, Republican for a dinner.

I think its bred an atmosphere of cordiality and more civility than weve seen in the past couple of years, and look, at the end of the day, were going to have our disagreements. But hopefully we can be more agreeable about them and not get into this personal gotcha politics that weve seen pervade the Capitol over the past few years.

Q: What are your feelings on the recommendations by Gov. Steve Beshears Blue Ribbon Commission on Tax Reform?

A: In general Im not going to be for the redistribution of $700 million of wealth that creates a larger tax burden on the citizens of Kentucky. Now, in fairness, I have been spending most of my time on pension reform, but I have looked at the recommendations.

There are some that I like, and there are several that I dont. I think the tax reform commission should be given a lot of credit. I think theyve done great work. I think the fact that were discussing it now, having a conversation that hasnt occurred since the (Gov. Ernie) Fletcher reforms passed in 2005, I think thats a good thing.

But there is not consensus on what to do. Theres a feeling in our caucus that we dont have a revenue problem, that we dont want to raise taxes and that there still are areas in state government where we think there is a lot of waste.

Q: Is there any movement on a constitutional amendment for casino gambling?

A: Theres not as much urgency because it cant go on the ballot until 2014, and so many legislators would like to maybe just wait. But it is one of those big issues lurking out there.

There is broad public support for putting it on the ballot, and according to the new Courier-Journal poll, there is increased support for passing it if it does get on the ballot.

Ive publicly said Im not going to sponsor the bill this year. I took my crack at it last year, but Im certainly willing to work with anyone, including the governor, on the issue if he decides to move it forward. Ultimately I think itll be his decision. I dont see the legislature moving forward unless he decides to do so, and even then its a heavy lift.