14 News Special Report: Pension Crisis

14 News Special Report: Pension Crisis

KENTUCKY (WFIE) - One of the biggest problems Kentucky leaders are facing is the state's pension crisis.

"We have the most underfunded pension plan in America and I am determined we are going to save it," said Governor Bevin.

That's the struggle for Kentucky Legislators this session. It's a goal anyone with a pension on the line is ready to fix.

But for some without a pension, the issue doesn't seem as urgent. Local leaders say that could be a false sense of security for many who don't rely on a pension.  The state's pension funds, haven't been well maintained for many years. There's more money going out to retirees than money coming in from current employees, and there's not enough overall money in the pension tank. To make up the deficit, the state wants the local governmental entities to pay up

"The far reaching impact of the how pension issue will become local and the governor knows it," said Owensboro city commissioner, Larry Conder.

Commissioner Conder says the states pension board already passed some preliminary estimates of that bill to the cities. Owensboro will need to scrape together an additional $2.9 million dollars in its budge each year to pay the pension price.  
"How much debt could we pay out? How many more projects could we do, if we had that kind of money? Every year. Instead, we'll be sending it to Frankfort. For the next minimum of 20 years," said Commissioner Conder. 
Where is the city going to get that money? One option is to raise the occupational tax. If you remember, Owensboro city officials raised that tax last year.

Another option is to cut services, projects, events, or people. Whatever way, the city must pay that bill somehow, and 30 miles away, Henderson City officials are scratching their heads too.

"Our impact is going to be $1.6 million dollars," said Mayor Steve Austin, "Now how will we do that? Don't know right now. There's going to have to be some kind of reduction in expense and a revenue enhancement from some area to pay for that." 
Mayor Austin said that could mean increasing property taxes, even after leaders lowered them last year. It could also mean cutting staff. He says there's no easy answer to solve this problem, and it's a problem that local leaders say isn't Henderson's fault, Owensboro's fault, or any Kentucky city's fault.
"The cities have put in their payments every month  The state did not always put in those funds. So they are way, way, way behind. So we all got a problem, they have got a big problem," said Mayor Austin.  
14 News asked Gov. Bevin if he thought local governments would need to increase taxes to pay for the plan.
"Maybe to meet whatever obligation they have for pensions at the local level, so there's a potential correlation. But ultimately, if we solve this problem, then we will have a stabilization of our economy that will allow us to have more resources on other things," said Governor Bevin. 
Raising taxes is something Commissioner Conder and Mayor Austin say they want to avoid. The hope is that those bills will be lowered or phased in over time. The state's House and Senate have that power, but whatever that final bill says, Commissioner Conder says no one will escape that pension price.

"That problem will become local. It will happen, and you're about to see it."

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