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From the Kentucky League of Cities:

LEXINGTON, KY-  “Our number one priority for cities is reducing the cost of retirement,” said KLC Executive Director/CEO Sylvia L. Lovely.

The Kentucky Retirement Systems Board of Trustees voted Thursday, November 15 to set the rates effective July 1, 2008 at 15.58 percent for non-hazardous workers and at 31.99 percent for hazardous workers.  KLC officials contend much more must be done in order to provide a real solution to the issue.

“After several years of skyrocketing rates it’s nice to know that cities will get a bit of relief next year…but we need to be mindful of the fact that this is a band aid and not a cure.  The drop in rates next year will just amount to a pause before they start going back up again the following year.  Then they will continue increasing at a reduced rate, but a relentless uphill climb nonetheless,” said Lovely.

The rates are lower than the current contribution levels of 16.17 percent for non-hazardous and 33.87 percent for hazardous.  According to the KRS actuary the rates for next year will drop because healthcare inflation, the primary cost-driver for retirement benefits, has leveled off after several years of sharp increases.   KRS says rate increases will continue in FY 2010 but at a more modest rate than the last three years.

Lovely said the onetime bit of good news will not end the cash flow crisis that is crippling our cities and creating some cutbacks in personnel and services.   She said it underscores the importance of ongoing work with the Governor’s Blue Ribbon Commission on Public Employees Retirement Systems and the incoming Beshear administration to identify changes that will bring significant cost cuts and benefit sustainability.

“As the only member of the Governor’s task force representing city government management and employee groups, I pledge a renewed effort to be a part of a real solution that features good employee benefits at an affordable price,” she said.

The newly announced KRS employer contribution rates and their impact will be the primary topic of discussion at a meeting of the Legislature’s Interim Joint Committee on State Government Tuesday, November 20 at 1:00 p.m. EDT in room 154 of the Capitol Annex in Frankfort.

In almost every case I will generally oppose new taxes and higher taxes. I generally oppose taxes for the purpose of initiating social change, such as “sin taxes” on cigarettes and booze.

But I am a member of the aforementioned Greg Mankiw’s “Pigou Club,” supporting higher gasoline taxes. And here is why:

I don’t know if global warming is real or not. I don’t know if it’s man-made or not. I am not a climate scientist and I lack the time and resources to understand the complexities of their conflicting research. I am an economist and an expert in insurance-risk issues.

I know that the chances of your house catching fire is relatively small, but everyone has homeowners insurance in case it actually does. You sacrifice a small portion of your income to protect against that rather calamitous outcome.

I think the same should be said for global warming issues. Even if it isn’t happening or isn’t man-made, the possible negative outcomes are so bad that we should at least sacrifice a little bit to take steps we feel reasonable certain will prevent them. No, I don’t think we should all give up our cars and live on the prairie. I said a little bit.

That being said, I think there sufficient external costs imposed by burning fossil fuels that we should begin to internalize some of those costs… AS LONG AS those costs go directly to abating the problem itself.

If you were to impose a carbon tax and use the money for some other purpose, it fails the test of a Pigouvian Tax. If you use the money as an insurance plan against future negative events associated with the burning of carbon-intensive fuels, I think it’s a fair trade-off.

Let the bashing begin. I am fully prepared.