Plan Wheeling Pension Funding

Wheeling officials were wise when, in 2001, they earmarked the city’s share of video gambling proceeds from the local casino for an important purpose. Now that funding from the source is starting to dwindle, municipal leaders may face a challenge – but not like they would have had they simply folded the gambling money into the general operations fund.

Before gambling was legalized in West Virginia, we warned the boost it gave to local and state governments would not last forever. That forecast has been borne out as casinos in Pennsylvania and Ohio provide competition for those in Wheeling and Chester.

One of the selling points for legalization of gambling was that part of the proceeds would go to local governments. In 2001, Wheeling officials decided not to include that income in the city’s general fund. Instead, every dime would go to pay down unfunded liabilities for police and firefighter pensions. Some money from the general fund also is used for that purpose.

Several cities have much larger unfunded pension liabilities than Wheeling’s. The situation is so grim that state legislators a few years ago enacted a law forcing municipalities with such liabilities to make ever-increasing payments into pension funds. The annual payments are required to be increased by 7 percent each year.

Use of gambling proceeds has helped Wheeling meet that requirement. Still, the cumulative effect of the 7-percent increase rule already has been a strain on the city budget. It means that next year, the city will have to pay nearly $3.6 million into the pension funds.

That increase comes at a time when gambling revenue is decreasing. As we reported this week, the city last year received $103,304 less from gambling than during the previous year. It is likely the revenue source will continue to drop before leveling off at some point.

Wheeling’s police and firefighter pension funds are in much better shape than those of some cities. Here, the firefighters’ program is 25-percent funded and the police system is 33-percent funded.

Still, the pensions will be a challenge, especially because of the state requirement for 7 percent annual increases in funding. That, combined with the decrease in gambling revenue, should prompt Wheeling officials to re-examine their long-range strategy for dealing with the pension programs, with the goal of minimizing the burden on taxpayers.