October 21, 2015 7:00pm
The Pension Pickle, Part II: Where We Go Now
By: Sarah Davasher-Wisdom, Senior VP of Public Affairs & Strategy.
In the last edition of News You Need to Know, I described what is arguably the biggest public policy issue facing our legislature in 2016.
Take a gander by clicking here.
So now that we have set the stage, let’s talk about what we can actually do about it.
What other actions can be taken to move Kentucky forward? Additional revenue options that advance, not hinder, economic development should be seriously pursued. As numerous organizations have pointed out, neither changes to benefits nor increased allocation from the state budget, individually, will be able to solve the issue. Kentucky must pursue a combination of commonsense revenue options, budget and cost savings, as well as structural changes to the pension system in order to divert a more severe crisis. Here are a few things that the legislature could do this session:
Kentucky could expand gaming by allowing for casinos. Previous projections have indicated this could lead to an additional $400M in revenue, which could be dedicated to pensions and education while strengthening Kentucky’s signature horse industry. In Louisville, there is no question that millions each year flow to casinos across the river. Expanding gaming would allow Kentucky to compete, creating additional revenues and jobs.
Kentucky could raise the cigarette tax. A recent report from the Campaign for Tobacco Free Kids indicates Kentucky ranks 40th in the tax on cigarettes. Studies also show an increase in the cigarette tax leads to a decrease in smoking rates. Sounds like a slam dunk.
Kentucky could also allow enact legislation that provides local governments with flexibility and more options in raising dedicated revenue for specific community development projects. Thirty-eight states allow one or more local governments to levy a local option sales tax upon a vote of the citizenry. If citizens are not seeing investment in their locality due to a lack of state funding, they should be allowed to transform their community. Louisville Metro currently allocates about $75 million per year to fund the County Employees Retirement System (CERS), as they are obligated to do, but are not permitted to levy an additional penny sales tax to invest in Louisville’s growth.
Kentucky could also allow for public private partnerships for infrastructure projects. The use of P3s in other states has led to savings for taxpayers and improved expertise and efficiency in executing infrastructure projects. Especially given our current situation, Kentucky should be doing everything possible to save taxpayer dollars and improve efficiency.
The legislature must act swiftly and responsibly to prevent future credit downgrades. There is no reason to keep digging a bigger hole. I recognize there are tough choices to make and we don’t want anyone to lose. Failure to address this problem means we all lose.
The legislature should do all things possible to accelerate economic development. Creating a business climate that attracts new companies while retaining and empowering our existing companies to grow will create a stronger tax base. GLI has an entire plan for this. While I have a word limit in this article, you will be hearing more from us about how to do this as the session approaches.
Obviously, this is a complex issue that will not be solved overnight and the thoughts above do not represent a comprehensive solution. If I had the definitive answer that drew consensus from all groups, well, I would be eating caviar every night. One thing I do know: addressing this issue for the long term would allow us to do great things within the Commonwealth.
>>For questions about GLI’s advocacy efforts, contact Sarah Davasher-Wisdom firstname.lastname@example.org.