FRANKFORT, Ky. (AP) - A plan endorsed by Gov. Ernie Fletcher and the state Senate to overhaul Kentucky's pension system would overburden the state's financial future, U.S. Sen. Jim Bunning said Tuesday.
Bunning, Kentucky's junior senator and a Republican, criticized a plan pending in the General Assembly that calls for the state to sell about $800 million in pension bonds to give its financially troubled public retirement systems a cash infusion.
"That won't work," Bunning said of the plan. "There's no way to pay the bonds off out of future income of the state."
Democrats and Republicans in the GOP-led state Senate approved the measure, aimed at boosting the system, which handles retirement benefits for state and county public employees and police and firefighters across Kentucky. The plan also seeks to put money into the retirement system for public school teachers.
Under the proposal, future employees would no longer receive the traditional pensions enjoyed by current employees and retirees. Instead, they would have benefits more similar to private sector retirement offerings.
It is pending in the Democratic-controlled House, which agrees with selling the bonds, but not changes to employee benefits.
House Speaker Jody Richards, D-Bowling Green, said the proposal's long-term effects on state employees were still uncertain, and there was not enough time during this session to resolve those issues.
"You need to know where you're going to land before you jump," said Richards, who is running for governor.
The "most prudent" thing for lawmakers to do this year is to "stop the bleeding" by selling the pension bonds, Richards said. Still, he acknowledged that could affect the amount of bonding lawmakers are able to authorize when crafting the budget again next year.
"There would still be some capacity left, but we would be going toward the ceiling," Richards said.
Fletcher, who has said he supports the plan, has threatened to call the legislature into a special session to deal with pensions and possibly other issues.
The legislature, which has only two working days left duringthis session, adjourned last week and is not scheduled to reconvene until Monday.
Senate President David Williams, R-Burkesville, has said the state stands to lose about $200 million this year if no changes are made. Within 15 years, the state could face annual pension payments of about $2 billion - a prospect that jeopardizes other government spending, Williams has said.
Associated Press Writer Brett Barrouquere in Louisville, Ky.
contributed to this report.
(Copyright 2007 by The Associated Press. All Rights Reserved.)