PEIA shortfalls hinge on budget debate

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PEIA shortfalls hinge on budget debate
By Chris Lawrence, MetroNews

The Finance Board of the Public Employees Insurance Agency is slated to meet next week in an emergency session. It’s likely the board will restore more than $120 Million in cuts the agency originally presented to insured state workers and retirees last year.

The lack of a budget for next fiscal year left the Finance Board with no other option.

“Fiduciarily they do have to do that, because they have to operate off reality as it is,” said Senate Finance Committee Chairman Mike Hall. “But in our conversations, should a budget pass that restores those funds, they can reverse that action.”

Some Republicans have been critical of the move, claiming the Tomblin Administration is using PEIA as a political football.   Tomblin Administration spokesman Chris Stadleman said Hall’s own words proved that wasn’t the case.

“Chairman Hall correctly said PEIA did what it had to do,” said Stadleman. “Somebody from the majority party, in the leadership in the Senate, agrees this is not a political game. We don’t want to play games with state and county employees’ lives.”

Originally the PEIA cuts were restored when the governor proposed his budget. The measure hinged on a 45 cent increase per pack  tax increase on cigarettes.   The Senate pushed the increase up to a dollar a pack and the House rejected any and all tax increases.   Instead, the House version pulled additional money from the Rainy Day fund to balance the spending plan.  All three versions collapsed with the revelation revenues for next year are likely going to be another $94 Million below estimate.   The debate now centers on how best to address the shortfall

But, for PEIA the matter is more even more pressing.  The enrollment period begins April 1 and the agency needs some kind of a plan to put before state workers.

“I understand Higher Ed and a lot of places are in the same position they need to plan for next year,” said Hall. “A budget needs to pass that reflects what reality is going to be in the near future for all of these groups to plan.”

But there still appeared to be no consensus Thursday on where to fill the massive budget hole.  Hall said many lawmakers are firmly against tax increase because they told voters they would fight against raising taxes when they were elected.  Timing couldn’t have been worse as the coal industry has taken a nose dive.  Now few want to face voters this fall with a vote to raise taxes on their record.   However, it’s possible they might have to face voters and explain why the local college has closed or a major local program has been eliminated.   None of it is appealing.

“All options are on the table,” Stadleman said. “We’re willing to have discussions on any number of items, the one place the governor has drawn the line is on taking all of this money to balance the budget out of the Rainy Day Fund.”

Hall said he didn’t believe the state had reached what he called “the Caperton Moment” referencing the six percent tax increase imposed soon after Governor Gaston Caperton took office in the late 1980’s. The state was in an even worse financial shape at that time than today.

Stadleman said the reality is at some point there need to be tax increases and the governor is willing to work with lawmakers to make them as painless as possible.

“At some point, we firmly believe there need to be revenue enhancements–tax increases–on the table,”  he said. “We haven’t done that in 20 years.  If you look at what’s happening in Oklahoma, Alaska, and Louisiana, we’re not unusual.  We are not an outlyer when it comes to energy states.”

As for the anticipated cuts in PEIA, Hall assured MetroNews Talkline listeners on Thursday he believed at least in that area there will be a solution.

“I have a pretty high degree of confidence that if there are Draconian cuts to the budget, that one is one item that can be restored,”  Hall said.