COVINGTON, Ky. (WKRC) - The Covington City Commission is asking for Gov. Andy Beshear and the general assembly to investigate the current pension payment system and find a way to give cities across Kentucky relief from what the commission says are "unaffordable" changes to the system. Covington City Manager David Johnston says the city has a looming budget crisis.
"The climate of quality of life and investment are going to go down because we can't provide public safety services. We can't provide park services, swimming pools. All those things that people have come to expect out of their local government," Johnston said.
Because of Kentucky’s pension shortfall, cities have been ordered to pay up to 12% more, compounding annually into the fund each year.
"When they started this 12% rule three years ago, we had to come up with an additional $750,000 out of our general fund to pay that new obligation. Now that's compounding. The next year we had to come up with approximately $880,000 on top of that $750,000. This year, we're expected to contribute an additional $1.1 million," Johnston said.
It will keep increasing year after year for the next several years, but there's no additional money coming into the city to offset it.
"When you take that money out of the limited pot of your general fund, that means there's less money to provide fundamental services in the community like public safety, potholes and street repair," Johnston said.
Johnston says Louisville is a prime example of what the new demands can do to a city. It had to slash its budget to make ends meet. A balanced budget is a requirement in Kentucky.
"That meant laying off firefighters, decommissioning important fire equipment, closing swimming pools. So, they were the leader in showing the impact of this state public policy," Johnston said.
Johnston and the city commission are asking for several things to be done to try and find a solution:
Place a freeze on increases in employer contribution rates made by local governments, which participate in the County Employees Retirement System, or CERS.
Direct the state pension board to do a new study of CERS, one that is based on "transparent, unbiased factual analysis."
Direct that investment strategies for CERS funds be based solely on CERS circumstances and not be subject to the restrictions and limitations applicable to KERS, the Kentucky Employees Retirement System.
Determine the future path forward for the soundness of CERS "within reasonable fiscal capabilities of Kentucky's local governments."
"If this continues, it's not just going to create a static level of service to meet those demands for pension obligation, we're going to have to lay off people or cut services," Johnston said.
Local 12 contacted Beshear's office, but it has not issued a statement as of this writing.
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