Kentucky Gov. Matt Bevin said that legalizing marijuana and taxing it to death would not solve the state’s underfunded pension problem. And he’s right. After all, out of the 50 U.S. states, 41 are completely unable to pay all their bills, racking up over $1.5 trillion in unfunded debt — Kentucky is one of them.
Being one of the states with the worst-funded pension systems in the country, it’s obvious that Kentucky will struggle as it enters an uncertain, unfunded future. And Gov. Bevin, desperate to not look like the one who let the mess get out of hand, called for a special session to fix the problem. Unfortunately, lawmakers failed to come up with any solution, even after the governor’s pressure.
Discussing the issue with the media, Bevin said that even if the state legalized marijuana it wouldn’t help. After all, it would take “hundreds” of years to replenish the public pension system.
Early in 2018, a criminal justice reform bill that would have helped to save the state money failed to make it to the governor’s desk.
The piece of legislation, which was promoted by Bevin, would have helped to save state taxpayers $340 million by putting an end to the growth of Kentucky’s prison population. Part of the changes promoted by the bill included reducing first- and second-offense drug possession charges from felonies to misdemeanors.
Similarly, the legalization of marijuana could at least help the state control its prison population by no longer making it a crime to possess any amount of the substance. That along with the tax revenue associated with the legal sales of weed could end up boosting the state’s revenue regardless of whether it would help the pensions system in the short term. Interestingly enough, Bevin doesn’t seem to buy into the idea.
“I personally see some of these things as ‘it looks good, sounds good’ but doesn’t even begin to make a real dent in the issue without the structural changes,” he explained.
Only The Market Can Fix The Pension Problem
States are inherently inefficient. So why do we keep acting as if bureaucrats should remain in the business of old-age security?
Precisely because financial security and retirement are long-term issues, politicians are the wrong people for the job. After all, their goal is to satisfy voters’ short-term needs. Unfortunately, state-run pensions have slowly entrenched themselves as rights, and courts have consistently rejected any changes to the system. The result? All politicians can do is to promise and push for more taxation so public employees get their retirement money.
For taxpayers to be protected, the only real solution is to bring the public pensions system to a complete end. But who will let this happen?
With federal, state, and local governments employing 17 percent of U.S. workers and 35.4 percent of people living in the country on some type of welfare, it’s clear that few, if any, voters would really go for the politician who promises to bring the public pensions system to an end.