Here is the “Kentucky Promise Plan” offered by Rep. James Kay of Woodford County, as captured from his Twitter feed. The subtitle on the proposal is “Comprehensive Pension Reform to Keep Promises While Avoiding Major Tax Increases.”

  1. Move all Legislators to State Employee Pension (KERS-NH)

  2. Dedicate Revenue Streams to Pension

    1. Prescription Opiate Tax – $1 per opiate-based pill on distributors – generate approximately $330 million per year
    2. Modest increase in cigarette, tobacco, and e-cigarette tax – generate approximately $200 million per year
    3. Establish pension premium on all state contracts that could be performed by state workforce but use contractors to avoid pension and other costs (does not apply to local and county governments) – estimated $20 million per year with offset of $15-20 million in cost savings
    4. Establish a Legislative panel to review all tax breaks, credits, subsidies, and incentives for compliance and to establish sunset process
  3. Transparency and Controlling Wall Street Greed

    1. End secret deals, fees, and profits, requiring all investments, including hedge funds, to report at the fund to fund level, disclosing all contracts, fees, and information to the public, including every individual and entity profiting on the pension system
    2. Establish Kentucky Roads and Infrastructure Fund – shift investments from Wall Street to the Road Fund with a guaranteed rate of return to the pensions
  4. Cut Government Spending

    1. Phased reduction of the number of political appointees in the Executive Branch by 25% (15% by 2019 to 25% by 2020)
    2. Cap political appointees’ salaries at $85 requiring legislative approval for salary that exceeds the cap. Also, publish all political appointees’ pension liability
  1. Employee Freedom and Limiting Risk through Voluntary Buyouts

    1. Offer employees buyout to manage their own retirement, converting their defined benefit to lump-sum individual plan, utilizing bonds to cover costs and maximize risk mitigation


  1. So refreshing to hear from a GA member positive, reasonable steps Kentucky can take to begin raising revenue to address it’s self.imposed financial woes rather than expecting its former, current and future employees to bear this burden alone. Thank you, Representative Kay, for all of your efforts on the part of our beloved state and its citizens.

    • Agreed – really appreciate Kay’s approach, and his calm discussion of the facts.

      Thanks for reading, AND for commenting!

  2. At the present time the first $41110 of retirement income per retiree is not taxed by the state of Ky. Reduce this exclusion to $15000 per retiree. To my knowledge no other state has such a large exclusion. Would this not help the pension fund?

    • That’s a pretty significant tax increase for retirees. $26,000 of additional taxable income * 5% rate == about $1,300 in additional taxes.

      Yes, it would certainly help the pension fund — but so would many other ideas, including the ones listed by Rep. Kay. I’d rather look at those first.

      BUT — thank you for the suggestion! We need to all think creatively about this.

      • A tax increase on retirees who are living on afixed income just barely above poverty??? Of course that observation , tho based on my own facts does not include the privileged group who are excluded from the normal pension plan I.e. legislators who are more capable financially than i to afford such increases….

  3. First sensible plan I’ve seen. Probably won’t be accepted because it makes too much sense to set up new avenues to generate revenue without stripping the working class of their rights. Start with the Transportation Cabinet and you can find a lot of wasted funds. More chiefs than Indians!!!

  4. Do we really want the pensions to be tied to the road fund (see 3b above), which is already is inadequate to maintain our roads? The Lane report ( ) states that 51% of its funding comes from taxes on the sale of gasoline. The trends toward hybrid and all-electric cars result in less gasoline taxes being collected, and thus other sources of revenue are needed. By the way, shouldn’t all vehicles share in the expense of our roads?

    It appears to me that associating the pension with road funds is just another way that the state can beg, borrow and steal these funds.

    • Your point about the road funds is a good one. I suspect we’re going to have to have a discussion on the road fund soon, as well.

  5. Per lowering tax on pension income. No one ever mentions that if you lower for state retirees, it would also have to be lowered on all 401K accounts for public and private individuals.

  6. Why not a tax that doesn’t affect most kentuckians. Inact tax on hotels and motels and bed and breakfast that affects mainly tourist. Ie. Florida and Tennessee. Those are the ones I am familiar with.

  7. Seems like the opiate tax is counter-productive. There are too many addicts already. Now let’s give them a reason to push it more. Really???? I typically like what he has to say, but this just sounds ludicrous to me. I’d like to know why casino gambling is not being considered. People already cross state lines to play. Why not reap the benefits of this type of revenue which would, or could, also improve tourism revenue.

    • Definitely agree about the casino gambling — although, casinos are declining across the country, so it would probably be a short-term solution.

  8. Even though casinos are not doing well in some other places I believe they could do well here if planned properly. Kentucky is BEAUTIFUL! We have so many other things to offer that would benefit from the extra tourists that a casino would bring. Lots of states around us benefit from Ky residents who travel for casino gaming. It’s time to let them come to us!

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