Kentucky Lawmakers Propose Casinos to Fix Ailing Pension

Public pensions would get 100% of proceeds from license fees and taxes for 20 years.

A group of Kentucky lawmakers has proposed allowing casinos to open in the state so it can use gambling tax revenue and license fees to support its ailing pension systems.

House Bill 229 proposes to amend Section 226 of the Constitution of Kentucky relating to gambling so that “the General Assembly may establish a Kentucky state lottery and may establish a state lottery to be conducted in cooperation with other states.”

According to the bill, prior to the fiscal year beginning July 1, 2038, 100% of the proceeds generated from licensing fees, and taxation of casinos and casino gaming in excess of the amount required, will be allocated to the Kentucky Employees Retirement System (KERS) nonhazardous pension fund, the Kentucky Employees Retirement System (KERS) hazardous pension fund, and the Kentucky Teachers’ Retirement System (KTRS) pension fund. The state’s general assembly would determine how much each pension fund would receive based on the needs of the respective funds at that time.

The fate of the proposed amendment would be decided on by Kentucky voters, who would be asked to answer the question: “Are you in favor of amending the Kentucky Constitution to allow the General Assembly to permit casino gaming if the proceeds are allocated to the public pension system for a 20-year period?”

This is not the first time state lawmakers have proposed allowing casinos and gambling in order to replenish Kentucky’s struggling retirement system. In 2015, then-Kentucky House Speaker Greg Stumbo pledged to propose a constitutional amendment to allow as many as seven casinos to open in Kentucky. Under his plan, tax revenue from casinos would be used to fund public schools, the state’s racing industry, and its pension systems.

State legislators tried again in 2016, with a bill proposed by two Louisville state senators. Under that proposal, 90% of revenue from the expansion of casino gambling would go to the pension funds for state workers and teachers.

“This gives the people of Kentucky the choice whether they want to collect the carloads of cash that are going across our bridges on a daily basis and paying for roads, bridges, and schools in Indiana and Ohio,” Kentucky Sen. Morgan McGarvey, referring to the border states where casinos have been legalized, told WKU Public Radio.

According to a 2015 report from the Kentucky Center for Investigative Reporting, Kentucky residents are major contributors to the billions of dollars raised by gambling that is going into Illinois, Indiana, and Ohio state coffers.

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