Ky. lawmakers remain at odds on pension reforms

FRANKFORT, Ky. (AP) -- Lawmakers were still at odds Tuesday on how to shore up Kentucky's financially troubled pension plans for state and local government retirees, even though Gov. Steve Beshear had another closed-door meeting in his office with the Legislature's two top leaders.

Beshear, who has been personally involved in the talks for the past week, said he remains optimistic that the issue can be resolved in the final days of the legislative session.

"I think we're making some progress," Beshear told reporters on Tuesday. "It's going to take some time."

The Democratic-controlled House and Republican-led Senate agree on the need to restore solvency to the pension system, which has a $33 billion unfunded liability.

Beshear met privately with House Speaker Greg Stumbo and Senate President Robert Stivers in his Capitol office late Tuesday. Stumbo said the meeting was another step toward a resolution, though he didn't elaborate.

The Senate is proposing a 401(k)-like retirement plan for new employees — a move the House opposes. And the House wants to use money from the lottery and horse tracks to boost the state's yearly pension contribution. The Senate is balking at that idea.

"I'm still hopeful that, in the end, we'll work both of those issues out," Beshear said.

Beshear, a Democrat, has said he intends to call lawmakers back into special session if they can't agree this time around on a financial fix for pensions. Legislative leaders have said they want to avoid that if at all possible because it would cost some $300,000 a week.

"I am optimistic that we can resolve the pension issue in this session and not require a special session," Stumbo said Tuesday. "I don't know anyone who wants a special session."

Senate President Robert Stivers was less optimistic.

"The proposals that have been put before us are being discussed," he said. "But I don't see a lot of hope at this time that the House and the Senate and the executive branch can reach an agreement."

A proposal passed by the House and now stalled in the Senate calls for the state lottery to add Keno and some new online games to generate revenue for the pensions. It also calls for tax revenue from slot-like devices, called Instant Racing machines, at horse tracks to be designated for pensions. Stumbo said those options could net $100 million a year, roughly the amount of additional money Kentucky needs to make its annual pension contribution.

In Kentucky, actual slots are banned, but two horse tracks have installed the Instant Racing machines. Players wager on the outcomes of past horse races, without knowing who won. The machines spawned a legal challenge that is now pending before the Kentucky Supreme Court.

Lawmakers were to begin a 1 ½-week legislative break on Wednesday before returning on March 25 and 26 for the final two days.

House and Senate leaders have agreed to work on the pension issue during that break.

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The legislation is Senate Bill 2 and House Bill 416.