February 27, 2015

A Legislative Perspective on the Kentucky General Assembly with State Representative Rick Rand

FRANKFORT – While each legislative session is different, many of the bills the General Assembly considers every year tend to be grouped in just a handful of categories: education, health, public protection, economic development and streamlining government services.

All of them came into play last week as the House worked through the remainder of our high-profile bills and many others that are also now ready for the Senate’s consideration.

One of the most far-reaching to pass would go a long way in reducing the significant long-term liability facing the Kentucky Teachers’ Retirement System (KTRS).

As anyone who has followed this issue – or has a 401(k) – knows, the last decade has not been an easy one for retirement accounts. That has been especially true for the public pension plans for our teachers and state and local government employees.

Two years ago, the General Assembly enacted legislation designed to put the one for the state and local government employees on much firmer footing. We followed that up with substantial new funding during the current two-year budget and will continue that trend until the system is sound.

This year’s House Bill 4 complements that work by authorizing what are known as pension obligation bonds for KTRS. The goal is to take advantage of the near-historic lows we are seeing for bond interest rates and the significant investment gains KTRS is experiencing.

During the most recent year studied, that system earned more than 18 percent. Its average annual rate of return over the last five years is nearly 14 percent, and its 20-year annual rate is 8.2 percent, or about double what the current borrowing costs would be.

Issuing $3.3 billion in bonds would be an unprecedented step, but we face an unprecedented problem. Many understandably worry about the additional debt, but the reality is that the long-term liability is a debt as well. The longer we wait to act, the more difficult it will be for the system, and ultimately the state, to meet our obligations a decade or two from now.

This becomes even more critical when considering that teachers do not receive Social Security retirement benefits because of the way the system was structured decades ago.

While this plan does not erase KTRS’ long-term liability, it is designed to give us the time we need to get to that point. On top of that, the debt service payments would be covered by re-purposing money the state is already providing to KTRS.

As we wait to see how the Senate responds, the House took up another issue on Tuesday that is expected to receive a positive reception in that chamber.

House Bill 152 is generally referred to as the “AT&T Bill,” and it largely deregulates the telecommunications industry at the state level. This would enable these companies to better focus on next-generation services like cell phones and internet-based calling.

There are built-in protections for rural areas. Landline services would be maintained, but the telecommunications companies would not be required to extend new lines. Rural customers that switch to new services but decide they want to return to their landlines would also have 60 days to act.

Several of the bills the House approved last week have been through our chamber before. House Bill 443, for example, would make it easier for state government to partner with private industry to accomplish a public purpose. This bill was vetoed last year over a dispute regarding potential tolls for a Northern Kentucky bridge, but the current bill does not contain that provision.

House Bill 60 would increase use of ignition-interlock systems, to better ensure those convicted of DUI do not drive intoxicated if a judge grants them this form of a hardship license. This legislation would also require the driver to be enrolled in a substance abuse treatment program.

House Bill 40 would expand the state’s expungement process to include most Class “D” felonies. This would enable those affected – nearly 175,000 people, according to Kentucky State Police – to request a court remove this crime from their record if more than five years have passed since the end of their punishment. As it is, many of these people are finding it difficult to find work or volunteer in their child’s school, even if their crime took place years if not decades earlier.

One of the new pieces of legislation approved last week – House Bill 168 – would restore the three-tier system for brewing, distributing and selling beer to customers, bringing it in line with the same set of rules governing Kentucky’s wine and distilled spirits industries.

These distinct barriers were enacted in the wake of Prohibition, but a dispute arose last year when Anheuser-Busch InBev bought a distributorship in Owensboro to go with one it has had in Louisville since 1978. Smaller brewers worry that if large breweries like AB InBev continue buying up Kentucky’s beer distributors, they will have a more difficult time getting their product into stores.

This week is the last full one of this year’s legislative session, so the time to let me know your thoughts or concerns about the bills before us is nearing the end. If you would like to contact me, my address is Room 366B, Capitol Annex, 702 Capitol Avenue, Frankfort, KY 40601; or you can email me at Rick.Rand@lrc.ky.gov.

To leave a message for me or for any legislator by phone, please call 800-372-7181. For those with a hearing impairment, the number is 800-896-0305.

I hope to hear from you soon.

Paid for by Rick Rand for State Representative, Regina Rand, Treasurer