Such economic travesty has visited Kentucky's middle class. Dwindling traditional pension plans as experienced on national lever perpetuates middle class Kentucky workers', also. In 1980, some 39 percent of private-sector workers had a pension guaranteeing a steady payout during retirement. Today that number stands closer to 15%, according to the Employee Benefit Research Institute in Washington, D.C. To further enrage middle class Kentuckian workers' they have an estimated 20% of their home equity and 40% of their IRA wealth in IRA's and live in a state's economy with 10+ unemployment!
KENTUCKY general fund budget currently underfunding services and benefits by $1.9 billion---according to State Budget Director.
Adding to Kentucky's $1.9 billion deficit is fact that over
80% of Kentucky counties are either facing bankruptcy or close to itdue to tax rates not bringing in enough tax resources. Pension bankruptcy is a looming potential.
In addition, total pension-system costs of Kentucky cities projected to balloon to three times their size in 2017 from what they were previous year. As a result Northern Kentucky officials are looking for allies to cut the pension payments cities make for employees.
Officials in Erlanger, Fort Thomas and Covington are hoping to build alliances to make changes and spare their cities' budgets.
Florence last year made $1.3 million in pension payments for its employees. Without changes to the pension system, in 2017, that cost would top $4 million, assuming the same number of employees and an average of 3 percent annual raises.
Fort Thomas, which paid $656,367 last year, according to a Kentucky League of Cities study, would pay $2 million in 2017.
William P. Hanes, executive director of Kentucky Retirement Systems, which manages the County Employees Retirement System, believes the 2017 numbers will be higher than those estimates.
"It's potentially a major financial problem for local governments in Kentucky," said Fort Thomas Councilman Roger Peterman.
"To look at these projections, the burden will become overwhelming - I guess it depends on your definition of overwhelming, but within 10 years, easily."
Erlanger City Clerk Linda Carter - who also serves as human relations director - is a board member of the Kentucky Public Human Resources Association, which includes officials from county governments, airports, sanitation districts, libraries and area development districts.
Those local entities also are affected by CERS cost hikes, she said.
"If we all joined forces, we would be a voice to be heard" in urging changes, Carter said. "We can be a force if we all join together."
State Rep. Michael Cherry, D-Princeton, and Sen. Damon Thayer, R-Georgetown, co-chairmen of the Interim Joint Committee on State Government, said there isn't much lawmakers can do to reduce benefits.
That's because retirees and current employees who were hired before July 2003 were guaranteed pension levels and health-insurance coverage.
"The balloon payments that are going to be due for baby bloomers are going to be a big problem for state and local governments," said Thayer.
"It's a very complex and controversial issue," Thayer said. "But the taxpayers are going to realize this is a serious problem, because at some point governments are going to have problems (paying) the costs."
Breaking the "inviolable contract" with current and retired employees is "not even a topic of conversation," Thayer said.
"I don't want ... to alarm current employees," Cherry said. "I don't envision us doing anything that will affect current employees' or current retirees' benefits."
If those aren't touched, Cherry conceded, major savings to local governments "might be 20 years off but the sooner we stop the clock, the better."
That's not soon enough, Covington Mayor Butch Callery said: "We need to stop talking about this issue and take some action."
It is the health coverage that is causing the crisis, Hanes said.
The problem is the guarantees lawmakers gave over recent decades - often at the request of city and county governments that now are facing the costs. Often, no government organization has testified against changes that added to the system's burden.
"They should be concerned," Hanes said about local officials. "They should have been concerned 10 years ago."
Cherry said he hopes to study the issue next year, and then make potential changes in 2008 or 2009. It's 2010 and procrastination rules!
Callery is pushing for quicker action. He argues the state should separate health-care costs from the pension system - as most governments do. He urges creation of a blue ribbon commission to examine the issue.
Callery this month wrote Cherry a letter, suggesting three people for that panel:
Mike Hauer, a retired Independence resident who has 30 years of pension-benefits experience; Covington Assistant City Manager Bill Moller, a former Cincinnati finance director who was involved in that city's pension management; and Peterman, the Fort Thomas councilman, who also is a bond attorney.
"That is so premature," Cherry said. "I do have his letter, and I've got it filed."
Cherry said he and Thayer want to "get smart enough to present to the legislature a framework for studying the issue. That's where we are right now."
The retirement issue seems to be an issue our state legislators do not want to attack because the solution requires raising and cutting unnecessary state expenses which will affect constituents----no PORK for several years!
The question is what has to happen for their to be such necessary action taken?
Look what happened on national level in 2007.
Reliance on stocks in retirement plans is greater than ever; 42 % of workers hold 401(k)s. But from 2000 till 2010 was a lost decade for stocks, with the Standard & Poor's 500 index posting total returns of just 4 percent since the beginning of 2000.
Many retirees banked on their homes as their retirement fund. However, 2007 record recession, according to Gary dorsch, Blobal Money Trends, 12/3/08 wrote:
*U.S. stock market lost $12 TRILLION DOLLARS in 13 months;
*global markets lost $30 TRILLION DOLLARS!
costing middle class Americans' to lose almost a third of their home values. In 2010 almost 22 percent of homeowners, or nearly 11 million people, owe more on their mortgage than their home is worth. Many are boomer's that are seeing them entering retirement age without any security or enough to sustain them. This generation of middle class Americans witnessed their slow economic death!
Kentucky legislators' and registered voters"? Decision time is here. Demand from gubernatorial candidates action to eliminate unnecessary taxes such as truck-weight distance tax which only 72% of Kentucky truckers paid since 1994 and collect an estimated $300,000,000 tax dollars from Kentucky owned motor vehicle owners property and usage tax evasion existing since mid 1980's, simultaneously cutting $1, 128,000,000,000 of appropriations from 2010-2012, 2012-2014 biennium budgets---during both bienniums declaring a mortorium on any legislation offering tax exemptions, deferrments, deductions, exclusions, credits and prefrential tax rates. Taking these significant actions is our will to leave our grandchildren a debt free state budget.
Remember. We have to eliminate $32 billion dollar lack of state asset valus that underwrites KERS potential state retirement; $250 million + Medicaid debt; $8.2 billion long term bonded indebtedness in addition to:
Education of Kentucky's children
Health care for the most needy
postsecondary education,
Public safety
Economic development.
