Bardstown Mayor Dick Heaton received a 32-page letter this week from the state budget director informing him that city contributions to its employees’ retirement is going to go up more than anyone anticipated.
Because of a lower-than-expected return on the rate of investment and slower growth in employment than was estimated earlier in the year, local contributions to hazardous-duty retirement is going up about 61 percent and non-hazardous is increasing about 50 percent for the 2019 fiscal year, which begins July 1.
The cost to the city’s bottom line for that year’s budget will be an additional $797,942, more or less.
“It’s going to bankrupt cities and counties,” the mayor said of the state’s pension crisis.
Gov. Matt Bevin is expected to call a special session of the state legislature this fall to deal with the problems facing all the state employee retirement systems.
Two weeks ago, the Bardstown City Council approved a resolution proposed by the Kentucky League of Cities supporting legislation to separate the County Employees Retirement System (CERS), which also covers city and many school district workers, from the Kentucky Retirement System.
The Bloomfield City Council has also passed the resolution and the New Haven City Commission is expected to take it up at its next meeting on Sept. 21. Fairfield has no employees covered by CERS, so its commission isn’t likely to address it.
“We feel like it gives cities and counties more control,” Heaton said.
Nelson County Judge-Executive Dean Watts said he knows of no similar resolution for county fiscal courts because counties, unlike cities, are subdivisions of the state.
However, he said he is concerned that the expected increase will cost Nelson County nearly as much as Bardstown — about $775,000 more than it’s currently paying.
Watts said he thinks the Kentucky Association of Counties will eventually support separation of CERS from KRS, but he thinks it would be premature for counties “to jump ship” this year.
“We’ve got some time to prepare” for whatever is going to happen, he said, and the General Assembly should be given a chance to address the problem.
Nelson County’s state legislators are talking with local officials about the issue.
Heaton said he had talked with Sen. Jimmy Higdon, R-Lebanon, and Rep. Chad McCoy, R-Bardstown, within the last few days, and they have scheduled a “town hall” meeting on the matter next Tuesday, Sept. 19, at 7 p.m. at Bardstown High School’s auditorium to hear from local leaders and the public.