The hundreds of retired state employees who rallied at the Capitol Tuesday were attempting only to explain to legislators and Fletcher administration officials the obvious: You either pay the cost of state pensions now or you pay them later and later is going to be far more expensive.
The protesters really didnt need to make their point. Legislators and administration officials are well aware of the ultimate cost of paying for pensions later; they only hope they wont be around when the balloon payment comes due.
Kentucky taxpayers, on the other hand, will be around, and they will have to fulfill the responsibility their elected leaders find so easy to put off for tomorrow.
After too many state budgets that skimped on funding the retirement system that provides pensions and health insurance for nearly 120,000 current and retired state employees, the system is underfunded by $350 million. The proposed 2006-2008 budget will fall short by $213 million. Without that money growing through investments over the years, the shortfall could run well over $1 billion in the future.
And the day of reckoning is not decades away. The baby boomers who are putting so much pressure on Social Security and private-sector pensions have been working for Kentucky state government and now are ready to cash in on the generous pensions the state has promised them for so many years.
But unlike the pension plan for Delta Airlines pilots and employees, Kentucky cannot hand over its pension obligations to a federal insurance program. By law, Kentucky must pay those pensions even if the money comes from the General Fund.
Thus the day may not be too distant when a governor and General Assembly must earmark hundreds of millions of dollars a year of general tax collections to pay pensions before any other budget items can be funded, including pay increases for future employees and teachers.
By continuing year after year to withhold necessary appropriations for the State Retirement System, and instead using money for golf courses, viewing stands for Elk and pork projects everywhere, todays lawmakers are guaranteeing a future crisis that will be expensive and painful to resolve.