This week, the House passed very important legislation to address the unfunded liability of Other Post Employment Benefits (known as OPEB), the last of several major long-term debt issues that have plagued our state.
I am proud that we will finally be getting this burdensome liability under control.
Late last year, the PEIA board voted to limit premium subsidy increases to 3 percent a year, cutting the $10 billion funding shortfall by half.
The new legislation redirects $30 million per year of personal tax income revenue that had been going toward the old Workers’ Compensation debt to the OPEB debt.
In addition, the bill creates a new trust for retired employees by dedicating $5 million per year to the trust from personal income tax and authorizes the appointment of a Select Committee on Other Post-Employment Benefits to study and propose an incentive for those retirees who were hired on or after July 2010.
Very importantly, the legislation changes the accounting methods that has been penalizing the county school boards for this liability, providing that the employer annual required contribution billed to the county boards of education for employees within the School Aid Formula are to be charged to the state.
All this will be taken into account as the House Finance Committee wraps up budget hearings with various state agencies and begins to develop the state budget.
This year’s proposed budget contains $84 million in tax relief to West Virginians. The food tax is being reduced by one cent on January 1 and another cent in July will provide $54 million in relief directly to West Virginia consumers. Businesses will also see some tax relief with the lowering of the state’s business franchise and corporate net income tax rates by $30 million.
The new, proposed budget also contains no new taxes and proposes a minimal growth of government for next year.
But we have seen our state revenue decline in recent months, while we are dealing with increases in expenses for programs such as Medicaid. West Virginia is much better off financially than most other states in the country, but we must remain vigilant. We have surplus funds to help ease the situation, but obviously cannot become reliant on that one-time money.
The $4.5 billion budget for the state’s fiscal year that begins July 1, is about $134 million more than last year’s, but remains in the black as many other states in the nation continue to see their budgets fall into the red.
The biggest growth in spending for next year will be going toward Medicaid. The budget would devote an additional $111 million to Medicaid to ensure there are no issues in funding the program.
Upon the conclusion of the budget hearings, legislators will put together an agreed upon budget for review by the full membership.
The House continues to stream audio of our proceedings. Those interested in listening in on the events of the session can listen to “Legislature Live” at: www.legis.state.wv.us/live.cfm