A measure to shore up West Virginia municipal police and firefighters’ pension plans was passed during the Fourth Special Session of the 79th Legislature, among nine other bills which transfer agency monies, authorize the use of federal stimulus dollars, address credits awarded under the Alternative and Renewable Energy Portfolio Act, continue the motor fuel excise tax freeze, address Uniformed Services and Overseas Voter Pilot Program, clarify expungement orders, and make technical corrections relative to the IRS Code.
Many West Virginia municipalities have created pension plans for their police and firefighters. Currently, those existing plans have a steadily increasing combined unfunded liability well in excess of $600 million. Cities throughout the state are obligated to pay increasingly larger contributions to the plans each year which are straining their operating budgets significantly – some to the point of bankruptcy.
To provide them with much needed assistance and financial security, Senate Bill 4007 would allow these cities to continue their existing pension plans for current members but provide the option of placing all their future police and firefighters in a new pension plan administered by the state’s Consolidated Public Retirement Board.
Each city will decide separately whether to use the new pension plan, which is similar to the state’s recently created Emergency Medical Services Retirement System. The state assumes no liability for the obligations of the new plan.
Currently, most existing pension plans for police officers and firefighters are not on a definite amortization schedule which is the cause for the ever increasing larger contributions yearly. Those choosing to participate in the new system will be on an amortization schedule to pay off unfunded liabilities in 40 years or less.
The bill does not impose any additional tax but reallocates one tenth of one percent of premium tax money previously diverted from the existing plans to pay unfunded liabilities of the Teachers Retirement System.
The new plan will go into effect January 1, 2010. No member of the new plan may retire until January 1, 2013. Cities will be required to buy disability and death benefit coverage under private insurance to cover employee claims arising before Jan. 1, 2013.
Two supplemental appropriations bills were also passed.
House Bill 410 moves $2.5 million from the general revenue fund to the Bureau of Senior Services. These dollars are directed at supporting aged and disabled programs.
House Bill 411 moves The remaining $27 million from the State Road Fund to the Division of Highways. The Division will use the money to repair secondary roads in the state.
Approximately $25 million in federal funding has been authorized for agency expenditures with the passage of House Bill 409 . The Department of Health and Human Resources will receive $13 million. That department continues to make timely payments but people with special needs continue to remain on a waiting list and do not receive help for years. Agencies receiving money provided by the federal American Recovery and Reinvestment Act (ARRA) are now authorized to apply it to services they render.
The purpose of Senate Bill 4002 enables West Virginia counties to use the federal allocation of recovery zone bonds also authorized by the ARRA.
Recovery zone bonds are split into two separate categories of bonds: recovery zone economic development bonds and recovery zone facility bonds.
Recovery zone economic development bonds are a type of taxable Build America Bond that allow state and local governments to obtain lower borrowing costs through a new direct federal payment subsidy, for 45% of the interest, to finance a broad range of qualified economic development projects.
Recovery Zone Facility Bonds are a type of traditional tax-exempt private activity bond that may be used by private businesses in designated recovery zones to finance a broad range of depreciable capital projects. These bonds may be used in “recovery zones,” which include any area that has been designated by the bond issuer as having significant poverty, unemployment, home foreclosure or general distress, or any area affected by military realignment, or any area that has been designated as an empowerment zone or a renewal community.
West Virginia has been allocated a bond limitation of $90,000,000 for recovery zone economic development bonds and $135,000,000 for recovery zone facility bonds. These bond limitations, or volume caps, must be reallocated to certain West Virginia counties, based on their decrease in employment compared to the state’s decrease in employment.
Counties need not use their volume cap, and may waive their allocation. The bill provides that counties may also sub-allocate their volume cap to other eligible bond issuers.
This bill also provides a procedure to certify to the Governor that counties are using, or sub-allocating, their bond allocation. In accordance with IRS guidance issued regarding recovery bonds, any bond allocation that is waived by counties may be reallocated by the state. This bill provides that the Economic Development Authority will develop a procedure to reallocate such waived allocations. Roads and transportation projects are also on the list.
House Bill 408 amends a definition in the Alternative and Renewable Energy Portfolio Act, to permit the Public Service Commission (PSC) to utilize an independent and industry-recognized alternative and renewable energy resource credit tracking system, and to permit the PSC to utilize an independent, industry recognized entity to verify and certify greenhouse gas emission reduction or offset projects, among other provisions.
Senate Bill 4004 eliminates the reduction of the flat rate portion of the motor fuel excise tax in 2013. The flat rate will continue to be assessed which will freeze the state’s gas tax at 32.2 cents per gallon.
Under current law the gas tax was scheduled to decrease 1.7 cents per gallon on Jan. 1, 2010 and another five cents in 2013. This law will change that, freezing the gas tax at it’s current 32.2 cent per gallon level through December 2010. This action will allow West Virginia’s communities to benefit from millions of dollars in additional funding for roadway paving. This will especially help with secondary roadways that are ineligible for federal stimulus road funds.
The bill terminates the Motor Fuel Excise Tax Shortfall State Road Fund and transfers all moneys remaining in the fund ($27 million) to the State Road Fund for the purpose of paving secondary roads. (See House Bill 411 mentioned above)
House Bill 406 creates the Uniformed Services and Overseas Voter Pilot Program which authorizes pilot projects allowing the use of certain voting systems by membe
