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Editorial - Vote yes on Saturday

September 22, 1997

West Virginia residents, famous for their resistance to new taxes, will get a chance to enhance that reputation in this coming Saturday's special statewide election. But this time it's going to be a little bit more complicated - to beat a tax hike, citizens will have to vote in favor of a new investment plan for state funds.

At present, West Virginia's constitution bars the state from investing state funds in the stock market. Only South Carolina retains a similar prohibition, and other states which invest in the state market get a return of 10.9 to 13 percent. West Virgina, which is restricted to the bond market, gets a return of 3 to 4.6 percent.

As we said in our August 15 editorial, this isn't just an obscure technical amendment to the constitution. Because the state hasn't shared in the stock market boom, its pension plans remain seriously unfunded. Instead of making enough money to fund their own operations, the funds needed a state subsidy of $315 million this year, Without a change, says Gov. Cecil Underwood, a change is "certainly probable."

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The change will not cost taxpayers anything out of pocket. And as for the risk, the other 48 states that invest in the stock market now have probably uncovered all the pitfalls involved in this sort of financial dealing.

What are the arguments against approval. According to the Charlestown, W.Va. bureau of The Associated, some fear it would allow the state to make risky and/or morally questionable investments.

The only real risk, in our view, would be having the investment decisions handled in-house, instead of contracting with a company with a proven track record. As for morally questionable investments, if citizens are concerned about things like tobacco stocks, the legislature could easily bar state from buying such stocks when it draws up investment guidelines.

Yes, there is a risk the stock market will go down. But the bigger risk, in our view, is that if voters refuse to make this change, a tax hike will be the only way to keep the pension system solvent. Don't let that happen; vote yes for change on Saturday.

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