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Don’t Keep Burdening Businesses

January 7, 2012
By MIKE MYER , The Intelligencer / Wheeling News-Register

It's entirely possible West Virginians could have had a noticeable income tax break by 2016 - except for the sins of state officials in the past. Remember that when you do your state income tax returns for the next couple of decades.

One of the key issues state legislators hope to deal with this winter is OPEB (other post-employment benefits for retired government workers, primarily teachers). To make a very long story short, it's thought the state needs to find money to pay down about $5 billion in liabilities for OPEB.

That's a lot of money, but some state officials have come up with what they see as a relatively painless (read "without new taxes") way to pay down OPEB. It involves revenue now set aside to pay off the old workers' compensation debt. When workers' compensation was privatized a few years ago, the state was left with an unfunded liability of billions of dollars. Funding streams have been earmarked to pay it off.

But it's expected the workers' comp debt will be paid off sooner than initially expected, perhaps by 2016. Aha! Money to use for OPEB!

Some folks don't like the idea of utilizing the entire amount earmarked for workers' comp to address OPEB.One local businesswoman - who also happens to be a member of the House of Delegates - doesn't like the idea very well. Delegate Erikka Storch, R-Ohio, also is chief financial officer of the family's business, Ohio Valley Steel in Wheeling.

Part of the workers' comp debt revenue stream is a surcharge businesses pay on premiums to provide workers' compensation coverage to their employees. Speaking to the Wheeling Rotary Club this week, Storch wondered aloud why the private sector should have to pay off the public sector's debts. In other words, why should a private company that had nothing to do with promising unrealistic benefits to government employees have to pay for them?

She has a point, even if, directly or indirectly, all West Virginians in the private sector pay the cost of government. But Storch is right that businesses, many of them limited in their ability to expand and create new jobs because of the workers' compensation surcharge, should not be singled out to pay for OPEB. Much fairer would be a system making all the state's taxpayers responsible - and some state officials seem to agree.

Rob Alsop, Gov. Earl Ray Tomblin's chief of staff, explained last week that about $230 million a year has been set aside to pay off the workers' comp debt. Of that, only about $45 million comes from the surcharge on employers. Thinking in the Legislature appears to be that once the workers' comp debt is eliminated, the surcharge ought to come off.

A $95 million chunk of that $230 million comes from the state's personal income tax. That amount could be redirected to paying down the OPEB liability, Alsop suggested.

The money has to come from somewhere. Frankly, it's probably a good idea to use revenue from the income tax. That way, all West Virginia taxpayers will be reminded of what can happen when legislators make financial commitments without worrying about paying for them.

Don't look for many substantive changes to be made to the state's gas and oil drilling laws this year. That isn't to say the rules are all firm, however.

After years of controversy, state legislators in December adopted an omnibus bill on drilling regulations. Virtually no one was entirely satisfied with it. But most people agreed the new law is a good one, on balance.

Though there have been lots of suggestions for changes, legislators "don't have any appetite" for major alterations, as one legislator put it this week.

Still, state agencies have some latitude in rule making. That will mean they will have to hit the ground running when questions, some it was impossible to anticipate when the law was written, come up. Administrative decisions will have the effect of firming up some of the new rules.

Myer can be reached via e-mail at myer@theintelligencer.net.

 
 

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