Pension fund payments eyed as a way to fill budget gap
By Brad McElhinny, WV MetroNews
CHARLESTON, W.Va. — West Virginia legislative leaders are looking for flexibility in the state’s pension funding to make a dent in the current half-billion dollar budget gap.
An idea being floated by House Finance Chairman Eric Nelson would refinance the state’s pension debt, which is currently scheduled to be paid off in 2034. The refinancing would extend the payments for a dozen years, Nelson said today on MetroNews “Talkline.”
“If we were to extend our obligation by just 12 years we have the potential of saving $100 million a year. Granted, it would cost us a little more over the long run but currently it would save us $100 million,” Nelson, R-Kanawha, said on “Talkline.”
The state currently spends about $500 million to stabilize its pension plans. West Virginia’s discipline in recent years has drawn praise from investment analysts.
There seems to be some enthusiasm for a pension payment budget move in the House — and perhaps thoughts of an alternative in the Senate. Gov. Jim Justice’s administration seems less excited about dialing back the state’s pension obligation payments.
Nelson asked about the possibility this afternoon as pension experts with Pew Charitable Trusts made a presentation before the Joint Standing Committee on Finance.
“Given what you’ve said today, can you comment on a little wiggle room we may have as a body in the payments over these next couple of years?” Nelson asked.
David Draine, a senior officer with Pew, responded that the organization has looked at other states that have changed policy to extend its pension obligation payments over time.
“It does push those costs over to the future,” Draine said. “The minimum you need to get across is making progress on paying your pension debt.”
Draine said some states have made the mistake of backing off too far on paying down their pension obligations. He said picking a plan and consistently sticking with it is the key to staying out of trouble.
“If you take one step back and two steps forward, that is part of managing something,” Draine said.
In an interview with reporters before the legislative session began, House Speaker Tim Armstead pointed to refinancing pensions as one way leaders could start to close the upcoming fiscal gap.