W.Va. amendment backers face apathy

August 26, 1997


Staff Writer, Martinsburg

MARTINSBURG, W.Va. - Proponents of amending West Virginia's constitution to allow the state to invest in stocks are fighting citizen apathy as the Sept. 27 special election approaches.

If approved, the amendment would allow "investment of state or public funds in common stocks and other equities" under guidelines established by the legislature. Under current law, the state can invest only in bonds.

The result has been serious underfunding of the state's pension funds, according to John Brown, spokesperson for Yes On One, a bipartisan committee established to support the measure. Brown said the state's major pension plans are underfunded by about $4 billion, partly because of the poor performance of the bond market in recent years.


"The problem isn't getting any better," said Brown, who said that $315 million in taxpayers' money was spent this year to prop up the funds. His group estimates the state may have to pay another $50 million to $100 million more next year to support the pension funds.

"Right now 13 percent of their tax money is going into shoring up these funds," Brown said.

Of the state's four major pension funds, the one for teachers is the most seriously underfunded, at about $2.7 billion. The pension plans for public employees, state police and the judicial retirement fund also are being propped up with taxpayers' money.

"We have to either disregard the pensions, have a tax increase, or go ahead and pass this thing," State Sen. Harry Dugan, R-Berkeley, said recently. Dugan supports the resolution and said its passage may allow the state to reduce some of the tax money it has been putting into the funds.

"I don't want another tax," Dugan said.

If passed, the state would be able to invest up to 20 percent of its money in stocks the first year. That would increase to 40 percent in the second year and to a maximum of 60 percent after that.

Brown said counties and municipalities also invest their money through the West Virginia Investment Management Board.

"The bond market has been kind of in the dumps, while the stock market has been skyrocketing," Brown said. Last year West Virginia's investments in bonds earned 31/2 percent, compared to 21 percent for Virginia, which can invest in common stocks, he said.

The amendment would give the state the flexibility to diversify its portfolio and get the best return on its money, Brown said.

"For a couple of years the legislature had tried unsuccessfully to just pass a law," but the state Supreme Court ruled a special election was needed to amend the constitution, Brown said.

The Yes On One Committee was formed by Gov. Cecil Underwood, a Republican, and former Democratic Governor Hulett Smith. Other members include state AFL-CIO President Joe Powell and Steve Roberts, president of the West Virginia Chamber of Commerce. The West Virginia Education Association, which represents teachers, also is backing the measure, Brown said.

Despite that diverse group of supporters, Brown said Yes On One has a lot of work to do between now and Sept. 27. He cited an independent poll conducted by a Charleston newspaper earlier this month that showed 42 percent of respondents would vote no, with 35 percent indicating they would vote yes.

With less than five weeks left until the vote, many people are not aware that a special election is scheduled. The resolution is the only item that will be on the ballot.

The legislature this spring passed a joint resolution providing for the special election. Brown said Yes On One members are working through their unions, associations and organizations to drum up support and the committee plans mass voter mailings as the election nears.

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