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West Virginia's lawmakers can't ignore pension woes

December 17, 2002

An international investment advisory company that reviewed all states' employee pension plans found West Virginia's plans have the nation's worst assets-to-liabilities ratio. To pay employees what they've been promised, the hard choices will be to either raises taxes or slash services.

Wilshire Associates, a Los Angeles-based firm, last month found that West Virginia pension plans for teachers and public employees were $4.6 billion short of what's needed for future pension payments - about half what's need for current and future benefits.

How did the state get into this mess? House Speaker Bob Kiss told The Associated Press that during the administration of former Gov. Arch Moore, the governor and the Legislature took funds that were supposed to be paid into the pension system and used them to balance the budget.

Kiss said that fixing that balance was his top priority when he was elected and after Gaston Caperton defeated Moore, the Legislature enacted a 40-year plan to set things right.

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But next year's payment into the plan will be as much as $300 million, a big chunk of a state budget now in the $2.9 billion range. Without new taxes, the obvious choices for cuts are education and road-building, both of which would hurt the state's economic-development efforts.

But, Kiss said that faced with raising taxes in the middle of a recession in one of the nation's poorest states, the Legislature might be tempted to divert cash from the pension plans to the general budget.

It's a temptation they must resist, because as Wilshire Associates officials noted, pensions are contracts with employees who've earned the payments with years of service. On the state as well as the federal level, there's a tendency to minimize negative reports and postpone the hard decisions until sometime in the future.

But unlike some other financial woes, this won't get better if it's ignored. Putting a proper bandage on this wound now will save taxpayers the expense of major surgery later.

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