FRANKFORT, Ky. (WDRB) -- There is a huge sigh of relief coming from Kentucky's cities and counties. They will not be on the hook for millions of dollars in increased pension costs. At least not yet.

Gov. Matt Bevin backed off what could have been a budget-busting legal fight resulting from last week’s ruling on the pension bill.

Judge Phillip Shepherd threw out the bill because of the rushed way that lawmakers passed it. They inserted the pension language into an unrelated sewage bill and passed it in just six hours.

But the governor and other Republican leaders warned the ruling also threatens other bills passed the very same way, including House Bill 362, which allows local governments to slowly phase-in their exploding pension costs.

“Following Judge Shepherd's ruling will mean several cities and counties in the state are likely to go bankrupt,” Bevin’s attorney, Steve Pitt, told WDRB News.

Pitt was expected to make that case in court on Wednesday. But, in a surprise move, Pitt backed off, and dropped his request that Shepherd decide whether those other bills are now also illegal.

Pitt told reporters that is still a concern, but he is not going to fight that battle right now.

“We need to get a ruling out of the Supreme Court,” said Pitt.

Attorney General Andy Beshear, who filed the pension lawsuit, accused the governor of using scare tactics.

“That every bill ever filed would somehow become invalid. It's simply not true,” Beshear told WDRB News.

A spokesman for the Kentucky League of Cities, which was prepared to intervene in the case, was relieved there will not be a legal challenge to the phase-in bill.

“We're really grateful that the governor's office kind of saw the light,” said Deputy Director J.D. Chaney.

Chaney said the loss of the phase-in bill could have left local governments on the hook for $100 million in additional pension costs this year.

“They’re able to breathe a little bit easier, and implement their budgets,” he said.

But Chaney knows the relief could be temporary.

“It could push it down the road,” said Chaney.

He hopes lawmakers fix the problem, and pass the bill again when they return to the Capitol in January.

Pitt said he'll file an appeal of Shepherd's pension ruling “in the coming days.” The case is expected to end up in the Kentucky Supreme Court.

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