The Kansas Chamber of Commerce plans to push legislators next year to reopen a debate over public pensions and start a 401(k)-style plan for new teachers and government workers.
Two chamber officials said Friday that a further overhaul of the Kansas Public Employees Retirement System is on the group’s legislative agenda because they believe the current system is going to become increasingly expensive for the state to maintain. The chamber’s goal is to control state spending so that Kansas can eventually eliminate its individual and corporate income taxes.
The chamber plans to formally release its agenda next month, but Kent Eckles, its vice president of governmental affairs, and Eric Stafford, its senior legislative affairs director, provided details during an interview. The Legislature convenes its 2013 session Jan. 14, and conservative Republicans will have majorities in both chambers, with much of the credit going to efforts by the chamber’s political action committee to elect conservatives.
Legislators approved measures earlier this year and last year to deal with the pension system’s long-term funding gap, now projected at $9.2 billion through 2033. For teachers and government workers hired after 2014, the state is moving away from traditional plans that guarantee benefits up front, based on years of service and salary, but not fully toward a 401(k)-style plan, where benefits are tied to investment earnings by the pension system.
“We didn’t really get that done last year,” Eckles said. “For the first time, our board wanted to tackle that issue, because they recognize it’s a big cost driver. It puts pressure on the state to fund it and to raise taxes.”
The chamber expects to have a broad legislative agenda that includes tax and spending issues, as well as preventing public sector unions from using funds automatically deducted from workers’ paychecks for political activities. The chamber supported massive income tax cuts enacted earlier this year, and it will push legislators to keep moving the state toward having no income taxes.
Any push toward a state 401(k)-style pension plan is certain to meet fierce resistance from public employee groups, as it did during the past two years. Previously, Democrats and moderate GOP leaders in the Senate stalled such efforts, but conservatives ousted eight moderate Republican senators in this year’s elections, including Senate President Steve Morris of Hugoton.
“Now with a new Senate, maybe we can move a little bit further,” Eckles said.