Fixing Kentucky’s Pension Problems

Jason Bailey argues in the Frankfort State-Journal that switching Kentucky government employees to a 401(k)-style retirement plan “has little or nothing to do with the state’s main challenge on this issue: how to pay back the existing unfunded [pension] liability.”

In one sense, Bailey has a point. After all, cutting up the credit card you’ve been abusing won’t pay the outstanding balance. But it should be obvious to anyone that keeping the credit card and your bad habits, even after you’ve paid the bills, leaves you with the same propensity for overspending.

The pension obligations themselves represent tens of billions of dollars in the coming decades. The only proper way to deal with a contractual obligation of that size is, of course, to pay it. But it doesn’t logically follow that a tax increase is the best way to fix Kentucky’s pension woes, though Bailey seems to think it is.

If Kentucky’s lawmakers were serious about meeting these pension obligations while respecting taxpayers, they wouldn’t continue to fund wasteful projects near and dear to the hearts of many Kentuckians: new arenas in Louisville and Lexington (and elsewhere), government-run golf courses, government-run resort parks and dozens of other similar wastes of taxpayer money.

Few would seriously argue that any of these entertainment projects is a better use of money than leaving it in the wallets of taxpayers. But Bailey, like many in Frankfort, seems implicitly to do just that. Not directly, of course. But by moving seamlessly from making the moral case for paying one’s bills to casting the pension bust as “primarily a revenue challenge,” Bailey appears duty-bound to believe that every dollar currently spent by state government is not only being spent well, but spent better than billions more dollars currently sloshing around in the private sector.

Maybe all that arena, golf-course and resort-park spending is terribly important. The real question, of course, is how important. When lawmakers start cutting subsidies to college basketball in Kentucky, we’ll all know they’re serious about setting priorities.