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Some Kentucky counties facing financial ruin

Christie Dutton

If Senate Bill 66, or similar legislation, isn't passed in these last few days of the general session, some Kentucky counties will go bankrupt.

County employers are expected to pay 45% more (on average) for their pension contributions on July 1. The massive rate increase was set as a result of the Kentucky Retirement System revised assumptions and goes into effect July 1, regardless of what happens to the Pension Reform Bill (Senate Bill 1). For example, Bullitt County would be forced to pay over a million dollars more in pension payments each year. Such a drastic increase will be difficult, if not impossible, for some counties to cover. 

Kentucky counties are asking for a PHASE-IN approach that would increase the pension payments over the course of several years. This phase-in in Senate Bill 66 states that the pension contribution will increase no more than 12% each year starting July 1, 2018, to June 30, 2028. A phase-in would give counties a chance to find savings and additional revenue to cover the rising cost of pensions. 

Without a phase-in of increased pension payments, most counties will face decimated budgets, major cuts in services and likely layoffs. Some Kentucky counties simply won't be able to pay it. That's the brutal reality for some of the counties in our state that are already trying to get by on a skeleton budget. These counties face insolvency, which would eliminate county funding for necessary services such as fire protection, 911 services, emergency management, animal control, public health departments and other services.

"We are in survival mode," says Shellie Hampton, Director of Governmental Relations for Kentucky Association of Counties. "It's going to be impossible for some of our counties to pay this all at once. We are reaching out to the legislators every chance we get to let them know we need a phase-in to keep counties out of financial crisis."

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