Gov. Matt Bevin’s legal team yesterday filed a 100-page brief in the case before the Kentucky Supreme Court which will decide the fate of the recently enacted pension reform law. Senate Bill 151, passed by the General Assembly this spring, addresses the Commonwealth’s longstanding public pension crisis and accompanying $84 billion unfunded liability.
“We are confident that the constitutionality of SB 151 is supported by solid legal precedent,” said Steve Pitt, general counsel for Gov. Bevin. “We look forward to the Supreme Court rendering a thoughtful and expeditious ruling, so that there will be clarity on this vitally important issue that significantly impacts the fiscal future of the Commonwealth.”
Earlier this summer, the Franklin Circuit Court invalidated SB 151 not on the merits of the law itself, but on the basis of two legislative-process issues. On Aug. 10, Gov. Bevin filed a motion to bypass the intermediate Court of Appeals and go directly to the Supreme Court, and was granted a transfer—with an accelerated proceedings schedule—on that same day.
The Governor’s brief underscores the paramount importance of the case before the Supreme Court, noting that “the Commonwealth now finds itself at a crossroads.” “Depending on the outcome of this case, its future will either be a bleak one defined by insolvency, extreme taxation, and maybe even a time when pension checks stop coming in the mail…or it will move toward a bright one defined by solvent pension systems, lower taxes that encourage economic development, and adequate financial resources to pay for both pensions and other important government services.”
Amicus briefs supporting SB 151 were also submitted by state House and Senate leadership and a consortium of the state’s top business advocacy groups—the Kentucky Chamber of Commerce (KCC), Northern Kentucky Chamber of Commerce (NKCC), Greater Louisville, Inc. (GLI), and Commerce Lexington, Inc. (CLI).
On behalf of House Speaker David Osborne and Senate President Robert Stivers, David Fleenor wrote: “The implications of the decision of the Court below [Franklin Circuit] are devastating for the day-to-day operations of the General Assembly.” Fleenor criticized the lower Court’s “vaguely enunciated standard” for three official readings of legislation and noted that “the expansion of the concept of what constitutes an appropriation bill effectively ‘kicks the can down the road’ on pension reform to 2020 at the earliest.”
“The consequences of failing to address this [pension] problem are nothing short of disastrous,” warned KCC, NKCC, GLI and CLI in their brief. “Not only does pension spending compromise the state’s ability to fully fund educational priorities, it adversely affects the Commonwealth’s bond rating, leading to a vicious cycle, with the higher interest on that debt further reducing the legislature’s ability to spend on education and other priorities.”
The Supreme Court is scheduled to hear oral arguments in the case on Sept. 20.