In a newspaper editorial Tuesday, Louisville Metro Councilman Jerry Miller, R-19, urges Kentucky lawmakers to make significant changes to public employee benefits to help the city deal with its growing budget deficits.
During the annual State of the City address, Mayor Greg Fischer warned residents about potential cuts to core city services as a result of a structural imbalance in the budget.
The mayor closed a $22.5 million gap during his first year in office using a number of stopgap measures, but a number of revenues have come up short this fiscal year. The city now faces a $12 million deficit over the next six months and Fischer projected a $30 million shortfall in the following fiscal year.
Miller says the city’s perpetual shortfalls are related to the state making financial promises to current and former public workers that it has failed to pay for, which has created an “unfunded liability” for local governments.
From the Courier-Journal:
“It is time for the governor and our elected state representatives to stop kicking the can down the road in hopes that a future generation will fix the problem. The time to take action is now. We can’t afford to pay people lifetime benefits for working no more than 27 years, especially pensions based on their highest pay rate.
That is why I am encouraging our elected officials to do the following: 1) Suspend or reduce cost-of-living pension adjustments, as allowed by KRS 61.691 when “the welfare of the commonwealth so demands.” 2) Place new employees in a defined contribution retirement plan. Failing that, at least base defined benefits on the lifetime average pay, not their highest few years. 3) Reduce health insurance costs by moving retirees into consumer-directed higher deductible plans.”
During his address, Fischer cited the funding of pension programs and health care plans as some of the “tough questions” that city leaders would have to face.