Gov. Matt Bevin's pension-relief bill passes in the Kentucky House in a close vote

FRANKFORT — Gov. Matt Bevin's approach to providing relief to regional universities, health departments and other "quasi-governmental agencies" from crushing pension costs passed a crucial test on Monday when members of the Kentucky House approved the plan 52-46.

The narrow House vote was widely considered to be the toughest test for Bevin's bill, and it came after three hours of debate when minority Democrats argued the bill will slash pension benefits of many employees of the affected groups.

The bill now goes to the Senate, which is expected to pass it on Wednesday and send it to Bevin to be signed into law.

The General Assembly is meeting in a special legislative session, which Bevin called last week in order to pass the bill.

The Monday vote illustrated the difficulty Bevin had in rounding up votes for his approach even though his fellow Republicans hold a 61-39 majority in the chamber.

Nine Republican House members joined Democrats in voting against the bill, including former House Speaker Jeff Hoover, of Jamestown; Rep. Robert Goforth of East Bernstadt, who was Bevin's opponent in the May GOP primary for governor; and Rep. Travis Brenda, a teacher from Cartersville.

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At issue in the session is finding a way to give relief to nearly 120 quasi-governmental entities, including most mental health centers, spouse abuse and rape crisis shelters and child protection centers, from a staggering 70% hike in already high pension costs that took effect July 1.

"There are no good choices for this dilemma," said Rep. James Tipton, a Taylorsville Republican who sponsors the Bevin bill, noting that any relief to the affected groups comes at the expense of the troubled pension plan for state workers. "But if we don't pass this legislation and these agencies have to pay the full rate ... some of these agencies may shut down."

Bevin's bill would be retroactive to July 1 and delay the higher rates for a year. It also offers options to those groups to pay off their liabilities to the state pension plan — either in a lump sum or in installments over 30 years — and get out.

Opponents say the bill is written in a way that pressures the groups to take an option that requires them to freeze the accrued benefits of most current employees and move them into less generous 401(k)-like retirement plans for drawing future benefits.

"Those (employees) that are affected by this bill don't get to choose," said Rep. Chris Harris, D-Forest Hills. He said many of these employees have worked for years planning to get a pension offered to them when they were first hired.

"They are now going to find out that that's not going to be available. And that's what's wrong with this bill," Harris said.

But Rep. Jerry T. Miller, R-Eastwood, responded to critics: "I think what we're seeing is a lot of fear-mongering. In politics, we all know that fear will generate money and fear will generate votes."

Miller and other defenders of the Bevin approach said current law has allowed groups to exit the troubled state pension plan and take their employees with them. Moreover, they argued that in recent years, as pension costs for the state plan soared, many of the affected groups have laid off employees and contracted out services they had performed.

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On Monday, Democrats tried to offer their alternative ideas, which would freeze the rate the groups must pay the pension fund at the pre-July 1 rate for 24 years. But House Speaker David Osborne, R-Prospect, ruled Democratic amendments out of order because they did not fit the narrow agenda set by Bevin for the session.

Steve Shannon, executive director of a community mental health center association, said later Monday, "We're very relieved the bill passed" because he said it was vital for the centers to get another year before being required to pay the higher rates.

He said the centers have some concerns about other aspects of the bill, but now have time to work with lawmakers in the hope of addressing those concerns in the 2020 regular session of the General Assembly.

Adam Caswell, vice president of government, corporate and foundation engagement at Northern Kentucky University, said, "This is a step in the right direction. It gives us the rate freeze. Now we'll look at the options and continue working with lawmakers and the governor."

Lawmakers passed a relief bill during the regular legislative session in March. But Bevin vetoed that bill because he said it contained an erroneous date and included an illegal provision. He said he would call a special session to pass a new version of the bill, which he unveiled in early May.

A special legislative session is estimated to cost taxpayers about $66,000 per day by the Legislative Research Commission.

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Reporter Tom Loftus can be reached at 502-875-5136 or tloftus@courier-journal.com. Twitter: @TomLoftus_CJ. Support strong local journalism by subscribing today: courier-journal.com/toml.