FRANKFORT —

FRANKFORT — Gov. Steve Beshear, the Democratic House and Republican Senate apparently are no closer to agreement on how to fund changes to the state pension system, a key difference on perhaps the most important issue still facing the 2013 General Assembly.

Beshear sidestepped the question Wednesday when he was asked by a reporter if the Senate had offered a way to pay for proposed changes to the underfunded state employee pension system.

“What I can say to you is the Senate and the House and I are discussing both pension reform and possible options for funding it,” Beshear answered.

But Senate President Robert Stivers, R-Manchester, later said there has been no funding proposal offered by the Senate.

“The Governor has discussed a menu of items with us, but there has been no proposal presented by the Senate.”

Kentucky’s employee pension systems are badly underfunded and Moody’s Investor Service recently downgraded the state’s credit ratings until it shores up those systems.

The Republican Senate passed a package of reforms based on recommendations of a task force which would move new employees into a hybrid, cash-balance plan but maintain current defined benefits for existing employees and retirees.

The bill states the General Assembly’s “intent” to begin fully funding the system — but it provides no defined source of revenues to do that.

The House rewrote the bill to maintain defined benefits even for new employees and passed a companion bill which calls for using revenues from expanded lottery games and instant racing to pay for the annual contributions. But the Senate refused to consider either bill.

House Speaker Greg Stumbo, D-Prestonsburg, and Beshear want a specified funding source for pension reform.

But Stivers and majority floor leader Damon Thayer, R-Georgetown, who sponsored the Senate pension bill and co-chaired the pension task force, have repeatedly said they want to fund the pension contributions within the current budget and projected revenue growth.

Stumbo released a statement which indicated Republicans may at least be considering some kind of funding method.

“I understand the Senate is working on a funding plan, but I haven’t seen the details yet or spoken with anyone in the Senate about it,” said Stumbo in a statement.

Lawmakers recessed last week until next Monday and Tuesday, Mar. 25 and 26, providing time for Beshear to consider vetoing any bills already passed. Pension discussions have continued during the interim and Beshear said he remains hopeful a deal can be worked out.

While the funding piece seems a key disagreement, the two sides haven’t indicated a resolution on their differences about how to structure reforms either. But Beshear Wednesday still held out hope.

“We have not reached any final agreement on anything yet,” Beshear said. “But those discussions continue and I remain hopeful that by Monday or Tuesday we will come to a positive resolution.”

The governor also said he is reviewing arguments about whether he should veto a “religious freedom” bill, but he hasn’t made a decision.

The Religious Freedom Act, HB 279, was sponsored by Rep. Bob Damron, R-Nicholasville, and passed by wide margins in both the House and Senate. It would require that government must demonstrate clear and convincing evidence of a compelling state interest before enforcing laws which infringe on people’s religious freedom.

Damron’s bill was a reaction to a case last year in which members of the conservative Schwartzentruber Amish sect were arrested and fined for failing to display orange, rectangular “slow-moving vehicle” symbols on their horse-drawn buggies. They contend the symbols violated their religious beliefs.

The case reached the Kentucky Supreme Court which upheld the arrests, but the General Assembly subsequently changed the slow-moving vehicle law to accommodate the Amish objection.

But several civil rights groups, including gay rights groups, have said HB 279, Damron’s’ bill this year, might provide a legal basis for ignoring civil rights laws regarding fair housing or employment. Louisville Mayor Greg Fischer earlier this week wrote Beshear urging him to veto the bill.

“We’re gathering as much information as we can this week by folks who have concerns on both sides of that bill,” Beshear said. “We’re hearing a lot from a lot of folks, and I’m trying to get my arms around it so that I can make the best-informed decision I can.”

Beshear has three options: sign the bill into law; allow it to become law without his signature; or veto it. But the legislature can override his veto with simple majorities of both chambers, 51 votes in the House and 20 votes in the Senate.

The House passed the bill 82-7 while the Senate voted for it 29-6.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/

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