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Mayors: Reconfiguring Kentucky's pension system could force local cities to raise taxes, fire police

Posted at 9:25 PM, Feb 18, 2020
and last updated 2020-02-19 09:37:52-05

COVINGTON, Ky. — Local city leaders are concerned with the way a retooled pension system will affect their ability to govern.

The mayors of Covington, Erlanger and Independence met with state lawmakers last week to discuss a bill passed by former Kentucky Gov. Matt Bevin. The bill increases the amount local governments contribute to the state's pension system.

"The numbers are unreasonable, unaffordable and unsustainable," Covington Mayor Joe Meyer said.

The city of Covington paid nearly $6 million into the retirement system in 2018. By 2025, that amount will more than double, to $13 million — nearly a quarter of the city's entire general fund budget. That's $7 million annually the city won't be able to use for infrastructure improvements, public services, new community investments or pay raises for employees.

"This affects all the cities, all the special districts, all the counties across the state," Meyer said. "Some of our Northern Kentucky verities have already implemented tax increases to cover the increased pension costs."

Local government leaders are now asking the state to:

  • Freeze the increases in the contributions from local pensions.
  • Direct the Kentucky Retirement Systems board to conduct an independent study to the local government pensions system so the issues can be looked at transparently.
  • Direct the investment strategies to be based solely on the CERS (local government pension system) circumstances only, not the state government pension system.

"If we are forced between laying police officers off, laying off firefighters or a tax increase, those are all terrible decisions to have to face," Meyer said.

Meyer said the local government pension system isn't as bad off as the state government pension system. He said they should know by mid-April how the legislature wants to proceed.