Making promises fit West Virginia revenues
Just two years ago, West Virginia taxpayers were on the hook for a whopping $10.3 billion in the projected cost of funding health insurance benefits for retired state employees.
The generosity of politicians meant state taxpayers led the nation — by a mile — in these "other post employment benefits" with a burden of over $5,600 per resident.
That $10 billion unfunded liability meant $10 billion would not be available to fund highway construction and maintenance, or the building of new schools and prisons.
Legislators took action by placing limits on taxpayer subsidies of state retiree health insurance premiums and ended this retirement benefit for anyone hired
after June 1, 2010. We shall see how long that lasts.
Nonetheless, the two moves over two years sliced the other post-employment benefits money pit down to a manageable $3.8 billion, dropping West Virginia from No. 1 in this debt to having the 11th best funded program, the Daily Mail's Jared Hunt reported.
Wall Street is noticing. Standard and Poor's issued a report on the other post employment benefits liabilities of all 50 states and found the national total fell by $16 billion in the last three years.
But West Virginia, which represents 1 percent of the total liabilities, accounted for 20 percent of the net drop in liabilities among the 50 states.
The importance of this remaining $3.8 billion in unfunded liabilities for retiree health benefits is that the debt holds down the state's credit rating. In June, Fitch Ratings confirmed that the state's general obligation bonds are rated at AA+, which is good, but still not triple-A.
While the state's credit-worthiness is bolstered by its solid rainy day funds and the ability of its governor to cut spending when the economy dictates it, nevertheless unfunded liabilities in the state's pension and retiree health funds are a drag on its rating.
Still, the state is reducing this unfunded debt.
Bravo to Gov. Earl Ray Tomblin and the Legislature for addressing an unsexy issue that had the potential for alienating a very important voting bloc: state employees.
Taxpayers should be wary of any and all efforts to backslide.