Chamber Pushing $5.5B Pension Bond

The Register-Herald, June 5, 2005

Editor's note: This is the first of a two-part series explaining why both business and labor say the proposed pension bond should be approved in the June 25 election.

CHARLESTON - Unless a $5.5 billion pension obligation is refinanced, look for a major fiscal dilemma down the road in West Virginia. Put simply, it means, in what is realistically a variable rate, the existing payment plan sees West Virginia's annual payout in pension obligations climbing to the maximum $720 million in 2034.

That's well over one-fifth of the current budget.

Thus, once the annual payment rises in the existing schedule, more pressure will fall on the Legislature to either raise taxes to meet the citizenry's demands out of government, or roll back services.

And taxes have a way of cutting into the business community, a fact of life that has the state Chamber of Commerce out beating the drums for Gov. Joe Manchin's plan to refinance the debt at a fixed rate so the state shells out $350 million a year over three decades.

"We will be spending more taxpayer money to handle pension obligations than if we do go ahead and pass this bond," says Chamber President Steve Roberts. "That, of course, could result in increased business taxes. We're trying to avoid increasing business taxes. We think any time you tax something, you get less of it."

In short, the Chamber fears - and some union leaders agree - that new taxes on the business community can only inhibit growth in the long haul, curbing economic growth and erasing jobs in the process.

Twice, the state Chamber's board met on the pension issue, up for a vote June 25 in a special statewide election. In the first go-round, the board delved into aspects of the issue, asking questions, and in a follow-up session, members agreed to get on board. "Our view of it is, all of us in our personal lives borrow money periodically," Roberts said.

"Now we have an opportunity to get a lower interest rate. That's essentially what it is all about. We have an obligation to our retirees in West Virginia. We know we are going to be spending this money, and we believe we can find a little cheaper way to pay down this obligation by selling these bonds."

Roberts said the special bond, aimed at retiring liability that has amassed in pensions for school teachers, state troopers and judges, drew on the expertise of some folks well versed in financial matters.

"Some pretty smart people have come up with what may be economically a good deal for us as a state," the Chamber leader said. "That is why the Chamber is out there pushing this so hard."

A small group has been organized within the Chamber to spread the word, with three weeks left before the election.

"Local chambers are signing on left and right," Roberts said. "I've written commentaries that are beginning to appear in newspapers around the state. We're going to get the word out. We're taking our role very seriously."

Roberts said he "feels very good" about the issue's chances with the voters.

"We think this is one of those things, that once you explain it to people, they'll support it," he said.

"The real challenge is, can you explain it to enough people fast enough. I think the answer to that is, 'yes, we can.'"