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OPINIONS
Editorial: Pension change improves outlook for city
This weekÕs Legislative approval of a measure to help West Virginia cities deal with rising pension costs was critical for places such as Huntington where pension costs are currently 20 percent of the cities budget.
Purchase this photoTo say it has been a long time coming would be an understatement.
This week's legislative approval of a measure to help West Virginia cities deal with their pension problems marks an important milestone in a decade-long dilemma.
The action was critical for a number of cities, including Charleston and Wheeling, but for Huntington it was more akin to commuting a death sentence. Without some change, the city faced almost certain bankruptcy.
The current city administration and local legislative delegation deserve a great deal of credit for helping bring all the various parties to the table and finding a consensus that was acceptable to the House, Senate and governor.
So, does this mean everyone gets their street paved next year? No, but over time, the change should free up significant funds for the infrastructure needs and other services that have been long neglected.
The city had seen its costs for police and firefighter pensions rising at a clip of $600,000-$700,000 per year, chomping through the city budget like Pac-Man in the old arcade game. The user fees added in recent years really only helped to maintain the status quo.
This year, the pension costs are $8.8 million, more than 20 percent of Huntington's $42 million budget. That would have increased to $12.4 million by 2015 and about $21 million by 2023.
But the new action allows the city to "close out" the existing pension plans to new hires, who will become part of a plan administered by the state. The city can then refinance its obligations for the old plan over a 40-year period.
That will eliminate the yearly increases and gradually reduce the annual payments. For example, the city estimates that in the 2011-2012 fiscal year, it will be paying about $1 million less than it will pay this year. The result will be a financial stability the city has not enjoyed in a long time.
Of course, there is a "to-do" list as long as your arm -- public safety, street paving, storm water repairs, business development, downtown revitalization and more. The city must continue to communicate clearly with residents about its spending priorities and objectives.
But a big weight has been lifted.
