Appealing Your Unappealing Taxes (Part 1) By: Frank Friday Esquire Director Our Old Kentucky Pension Crisis By: Frank Friday Esquire Director county board of tax appeals. This is a 3-member panel of independent experts appointed by the county judge or, in our case, the Metro mayor. The property owner must obtain and complete an appeals form from the county clerk’s office in the county where the property is located. The appeals form requires the property owner to You don’t have to be a government employee to know that we have some serious problems with our state’s pension system. This last session, our legislature passed some historic reforms aimed at finally resolving the upside-down finances of the pension systems the state runs for the benefit of government employees at the local and state level. (There are 2 separate plans for county employees, 5 for state workers, and 1 for teachers) These measures will fix the underlying mistakes in the long run, but sadly, this will still leave many levels of government pinched in the near term as they struggle to pay the increased employer contribution assessments. Understanding the situation, though, makes clear the trouble Kentucky had made for itself. Years of outright denial of reality by some leaders had drained away pension reserves, especially in the state employee and teacher accounts. Last year, the Standard & Poor’s rating agency found Kentucky had the worst- funded pension plans in the nation with an average of 37.4% of funding, half the national average. The state employee’s component had only a 17% level and would run out of money provide general information about the property under appeal. It also requires confirmation that a conference has been held with the PVA. Finally, the property owner must state his or her opinion of the fair cash value of the property and explain why it is thought that the property is assessed too high. After completion, the property owner must then file the appeals form with the county clerk’s office. The county by 2024. This was caused by decades of intentional under-funding, and unrealistic benefit assumptions. For example, Kentucky is the only state in the country where workers and teachers could receive benefits starting in their late 40s, whereas most require waiting until at least age 62. Under newly passed SB 151, all new teachers will be given a “hybrid” 401-k style plan, as new state employees from 2013 onward already have. These new teachers will have to have a minimum of five years’ service for full benefits and must be 65 or have a total of 85 years in age and service. Retirees and current employees will see no changes in benefits, and even the current 1.5% COLA for retirees will stay in place. Current teachers will not, however, be able to accumulate more sick days for clerk’s office will schedule and notify all property owners when and where their appeal hearing will be held. The last date to file an appeal is one working day after the close of the inspection period. (In Part 2 of next issue, we will explore how the full appeal hearing works) retirement calculation purposes, and hazardous duty employees hired after 2013 will no longer have a $5,000 death benefit. Complete funding of the employer contribution is now also required and it is already starting to hurt. The state budget, for the first time in decades, finally funded its portion which comes to $3.3 billion over two years. For many local governments and school boards, immediate full funding of their portion was likely impossible. So under HB 362, these will be phased in over 10 years. Given all the sturm-and-drang over pensions, the final outcome of this year’s legislative session was probably as fair to everyone as might be expected. The cash crunch and the recent New Jersey sports gaming decision however, has perked up renewed interest in Kentucky adopting expanded gaming as a way to pay for pensions. This may happen in the next few years, but it would, at best, be a partial solution. Most analysts figure a Kentucky casino law would produce about $250 million in annual state taxes, only about ¼ of what is needed. So as with many things in life, there simply may not be an easy answer coming around the corner. continued from page 1 2 Photo courtesty of: Nick Youngson