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House passes pension bills, sends them to Senate

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FRANKFORT, Ky. (AP) — Revenue from lottery games and slot-like machines at horse tracks could be used to shore up Kentucky's pension plans for government retirees under legislation that passed the Democratic-controlled House largely along party lines on Wednesday.

Lawmakers have been working for the past month on ways to boost Kentucky's financially troubled pension systems, which have a combined $33 billion unfunded liability.

The revenue measure, which passed 52-47, was one of two separate pension bills that made it out of the House on Wednesday. The other, which was initially a Senate bill, was rewritten to assure that new government hires could participate in the same retirement plans as current employees. It passed 54-45. Both are expected to undergo major revisions or be rejected altogether in the Republican-led Senate.

House Democrats removed a Republican provision that would have created a 401(k)-like plan for incoming workers. They also added language that would allow retirees to receive cost-of-living increases, but only when the state has enough money to pay for them.

State Rep. Brent Yonts, D-Greenville, said the key is requiring the state to always make its required contributions to the retirement systems. Yonts said the state hasn't contributed in full in 13 of the past 21 years.

"To solve the problem, we must put more money into the pot," Yonts said.

The legislation would also prevent police, firefighters and others who served in hazardous-duty positions for at least 25 years from collecting retirement benefits before they're 50 years old.

The revenue bill calls for the state lottery to add Keno and some new online games to generate revenue for the pension systems. It also calls for tax revenue from slot-like devices, called Instant Racing machines, at horse tracks to be designated for pensions.

Stumbo said that could net $100 million a year, roughly the amount of additional money Kentucky needs to make its annual pension contribution.

In Kentucky, actual slots are banned, but two horse tracks have installed the Instant Racing machines. Players wager on the outcomes of past horse races. The player doesn't know the identity of the race, but gets racing form information to judge the likely winner. The machines spawned a legal challenge that is now pending before the Kentucky Supreme Court.

Lawmakers have been bouncing around several ideas to raise money for pensions, though most have been rejected.

A proposal to increase the state's cigarette tax from 60 cents to $1 a pack fell to the wayside last week.

House Speaker Greg Stumbo said lawmakers wanted a way to make the state's pension contribution without raising taxes. He said revenue from the lottery and horse tracks would achieve that.

Stumbo said passing the revenue bill could allow lawmakers to avoid having to return to Frankfort for a special legislative session after the current one ends in 10 days. Gov. Steve Beshear has said he may call lawmakers back if they don't get the pension issue resolved.

"I would encourage you to vote for this bill even though you have some reservations," Stumbo told House members.

The vote on the revenue measure came after a lengthy debate over whether it needed more than a simple majority to clear the House. Republican Floor Leader Jeff Hoover said revenue measures in odd-year sessions need a supermajority of 60 of the 100 House members to pass. Stumbo ruled that the supermajority is required only for final passage, and that both measures voted on Wednesday would be overhauled in the Senate and sent back to the House for final passage.

Senate President Robert Stivers, R-Manchester, disagreed with Stumbo's position.

"It is my position that this action would submit the entire process to a legal challenge based on constitutional grounds," he said in a statement.

"Based on that, the Senate cannot accept the bill due to its being unconstitutional and therefore out of order."

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The legislation is Senate Bill 2 and House Bill 416.

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