Kentucky Club for Growth
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July 17, 2012

New Accounting Rules Will Expose Kentucky's Pension Failure

It is commonly known that Kentucky is headed to a pension disaster. Years of underfunding a generous defined-benefit plan have left a hole estimated to exceed $37 billion.

The Pew Center for States estimates that Kentucky's plan is 54% funded, far short of the 80% recommendation and fourth-worst in the country behind Illinois, Rhode Island and Connecticut. (Rhode Island, however, is advancing serious reforms.)

Recently, the Governmental Accounting Standards Board issued new rules governing the accounting practices of state pensions, rules designed to expose soft accounting that allows states to be more optimistic than they should. It will eliminate overly-rosy assumptions of market returns, and force underfunded states to assume that their plans will go broke.

From the NY Times:

The new rules are the result of more than five years of work by the Governmental Accounting Standards Board on one of the most contentious topics the agency has ever tackled. The current rules have been criticized for making pensions look more affordable than they really are and creating incentives for governments to take undue risks with taxpayer money.

In many struggling municipalities, the coming changes, which are expected to be ratified by the board on Monday, could lead to credit rating downgrades, making it more expensive to borrow. The rules do not take full effect until 2015, but some governments are likely to adopt them sooner.

While some economists do not think the rules go far enough, Kentucky's pension system will certainly be exposed.

Mr. Attmore declined to predict which states and cities would bear the brunt of the board's rule changes, but said that, in general, it would be those that had failed, year after year, to set aside as much money as their actuaries instructed. Such plans include those operated by Illinois, New Jersey and Kentucky.

Kentucky's current pension system is unsustainable. The time to reform was years ago, and it's about to be exposed.

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03/29/12 : RS12 HB 499 - KEY VOTE - Insurance Premium Tax Hike

03/29/12 : Lip Service to Kentucky's Debt Problem

03/19/12 : RS12 HB 202 - KEY VOTE - A Health Care Mandate Without Precedent

03/15/12 : RS12 SB 10 - KEY VOTE - A Constitutional Amendment to Guarantee Legislative Oversight of Regulations

03/15/12 : RS12 SB 4 - KEY VOTE - Improving Regulatory Accountability

03/12/12 : Clarifying Redistricting, Maybe

03/08/12 : House Passes Budget Quickly with Eight Percent Spending Increase

Lexington Herald Leader 5/10:

"Thayer, 44, responds by calling Hostetler "a little desperate." Thayer touts his conservative support from U.S. Sen. Rand Paul, R-Ky., the National Rifle Association, the pro-business Kentucky Club for Growth (which ranks him best among 38 state senators) and the anti-abortion Kentucky Right to Life."


Last weekend, the Kentucky Club for Growth's strong anti-tax stance was recognized in the Courier Journal.

But other political experts say they aren't convinced outside groups will want to get involved, especially with public polling showing Beshear with a double-digit lead and Williams' record of occasionally supporting tax increases failing to excite conservative groups such Club for Growth or the tea party-related FreedomWorks.

"They're adamant about the 'no tax' thing," said Jennifer Duffy, a senior editor with the non-partisan Cook Political Report.

We are adamant about the 'no tax' thing, and we will continue to be the taxpayer's advocate in Frankfort.


Drees: Raise gas tax to fund bridge - Pat Crowley, NKY.com

Ky. House nears tax vote - Pat Crowley, NKy.com


Donor records might have similarities - Lexington Herald-Leader

Club for Growth launches in Oregon

The Kentucky Club for Growth is proud to announce its 2007 scorecard rating members of the Kentucky General Assembly on fiscal issues.

How did your legislators do?


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The KY Club for Growth seeks principled candidates who are committed to the following:

* Free market principles
* Lowering taxes
* Reducing spending
* Decreasing the size of government
* Judicial reform
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