General Assembly Veto Override Day March 28, 2019

Introduction

The last day of the session was last Thursday. That day is reserved to override any of the Governor’s vetoes. The Governor has 10 days to veto any of the Legislature’s previous enactments, but business could still be conducted on the last day. If he fails to veto anything within the 10 day window, the enactment automatically becomes law.

Governor’s Vetoes

The Governor vetoed two bills: HB 4 and HB 268. Of HB 4, the Governor' stated that the bill “serves a solution for a problem that does not exist.” HB 4 placed greater restraints on how regulations would be promulgated, making it harder to enact them. As such, HB 4 acted as a restraint on the executive branch. HB 4 passed the house 61-36 and the veto was overridden 58-27. I voted—now, get this—against the veto override. In other words, I agreed with Governor Bevin.

Governor Bevin vetoed HB 268 because the “current budget language passed by the General Assembly is more fiscally sound in maximizing resources . . . “ HB 268 was an act dealing with how universities dispose of their property and how Area Development Districts, like GRADD, spend their money. According to Bevin, over half of the ADDs objected to the bill. Lawmakers did not override the portion dealing with universities, but did override the governor’s veto with regard to the ADDs.

HB 358

The “big” bill on the last day of the session was HB 358. The bill dealt with (1) freezing the rate at which regional public universities and quasi-government agencies like health departments and rape-crisis centers contribute and (2) allowing the regional public universities and “quasis” to buy out of the state retirement plan. Had the bill not passed the contribution rate would have risen from 49% to 84% of their payroll. Failure to freeze the rate would have resulted in most institutions closing their doors.

The actuarial analysis was, unbelievably, available to legislators that at 8:15 p.m. I’d challenge anybody to review the actuarial analysis and state definitively whether the enactment of this legislation was a good or bad thing. The final price tag to the KERS Non-Hazardous System was $799 million and raised the contribution rate 5.3% to the remaining participating employers in the system. Thus, next year, the contribution rate will rise to 83.5% of payroll for those participating in KERS Non-hazardous unless legislators freeze the rate again.

ACTUARIAL ANALYSIS

The bill shifted costs from the public universities and quasis to the already troubled and underfunded state pension plan.   It is a complicated matter, but this bill takes the affected universities and agencies out of the state retirement system – unless they decide by the end of December to opt back in.  If they choose to remain, they will have to find a way to pay a 70 percent increase in their annual retirement payments. Jim Carroll, with Kentucky’s retirees stated it the following way in his twitter account:

 

            If they stay out, however, they will have to pay off their portion of the retirement system’s liabilities, but at a rate low enough that it would take decades, maybe a half-century or more, to get there.  Imagine buying a house with a 30-year mortgage and finding out that, at the end, you owe more than you did when you bought it.  That’s what this bill does.

            It is important to emphasize that this bill only affects those paying into what is called the Kentucky Employee Retirement System.  This bill has no impact on teachers, local government employees and those who work in hazardous-duty jobs like police officers and firefighters.  Employees at the University of Kentucky and University of Louisville have different retirement plans and are unaffected, as well.

            Although this bill was the most controversial issue the House and Senate considered on Thursday, some other worthwhile bills did pass that day.  One will have businesses make reasonable accommodations for its pregnant employees, while the other will make our elementary and secondary schools tobacco-free unless they decide to opt out.  Most schools have already adopted this policy, but this will ensure it applies more uniformly.

Conclusion

            As always, if you have any questions, feel free to contact me. My email is rob.wiederstein@lrc.ky.gov, and you can call the toll-free message line at 1-800-372-7181 each weekday.  If you have a hearing impairment, the number is 1-800-896-0305.