Editorial: Cure

Bonds best solution

The Charleston Gazette, June 1, 2005

ASK yourself: If you were a top corporation chief, obligated to generate satisfactory profits for stockholders, would you want to expand into a debt-ridden state where your new plant would be expected to help pay off nearly $10 billion in old obligations?

Of course not. That’s why West Virginia’s giant workers’ compensation and public pension system deficits have been a millstone around the neck of the state’s economic development efforts.

The long-running workers’ comp dilemma was cured during the swift special legislative session in early January. Lawmakers approved Gov. Manchin’s strategy to eliminate that debt by selling $3 billion in bonds, raising revenue to pay off the bonds, and converting workers’ comp to a private employers mutual plan.

Now it’s almost time for phase two: the pension cure. The Legislature scheduled a special election June 25 to approve the sale of $5.5 billion in bonds to wipe out yawning shortages in retirement systems for teachers, troopers, judges and other public employees.

West Virginia taxpayers are coughing up $350 million a year to keep these pension plans afloat — and this obligation eventually will rise to $700 million a year under a 40-year correction agreement. But if the bond sale is approved June 25, excess proceeds from the bonds will be invested in stocks, generating enough new revenue to hold the yearly taxpayer tab at the current level. If the bond proposal is defeated, taxpayer cost will continue rising to $700 million.

Thus the June 25 election offers a blunt choice: Do you want to spend $350 million a year to bail out public pensions, or $700 million? Obviously, the lower cost is the lesser evil. Therefore, simple arithmetic makes it clear that voters should approve the bond sale.