Wednesday, June 08, 2005

WV: For Sale, Used But Works Great!

West Virginia has seen a great deal of action from the executive branch and the legislative branch of government this year and so far it seems that Governor Manchin is sticking to his words of turning West Virginia around. Many people in West Virginia have placed their faith in him, as his victory of 60+ percent proved. And his "honeymoon period" showed that the legislature of West Virginia is willing to help and try out his way of governing.

During his first few months in office he has gotten many of his proposed bills passed, including bills that deal with tort reform, toughen ethics laws, and reorganize certain state agencies. There were also many bills passed that can be considered as progressive economic legislation for West Virginia. And along with those bills, Manchin visited Japan in hopes of strengthening business relations to bring in more jobs and economic stimulants. Indeed, Manchin is doing something to change the course of West Virginia�s economic plateau. But, the current concern of West Virginia and its stability is the sale of bonds to secure pension benefits.

West Virginia has been facing the problem of $3+ billion debt for some time now and Manchin says it is time to deal with it. Voters will start going to the polls Friday to decide whether West Virginia should sell up to $5.5 billion in bonds to make up for the $3 billion+ debt. West Virginia's constitution forbids the state from taking on debt, so voters must amend it each time the state sells bonds.

Manchin wants to sell the bonds as part of his plan to erase funding gaps in pension plans for teachers, troopers and the judiciary. The bonds would replace a court-ordered repayment plan that Manchin says is costing the state budget too much. Under the current plan, the liability payments to the pension funds would increase ever year. This year the government is responsible for $350 million which equals 11.2% of the State�s budget. That payment will then increase each year until 2034 when the payment will reach $724 million.

Although many favor this action, some are opposed to it. Senator Steve Harrison, R-Kanahwa, says he does not buy the "refinancing mortgage" analogy. He says that there is no real estate for collateral to back up the loan. He and many others feel that this is too much of a gamble for the state of West Virginia and the chances of failure and the wellbeing of West Virginia are too much to risk. Another infamous name throwing his opinion, and possibly weight, around is Don Blankenship, CEO of Massey Energy. Blankenship says that he is not sure if he will get involved in this issue, but is definitely against the selling of bonds.

Governor Manchin and his administration want to let everyone know that careful consideration has been placed into this idea. Basically, he is telling everyone that it is not as much as a gamble as others will have you believe. Of course the stock market will affect the bond rates, but everything will be handled by qualified, capable professionals who have experience in handling large bond sales and investments in West Virginia. There will be a multitude of professional consultants, finance advisors and lawyers working along side the bond counsel, underwriters, trustee and state treasurer.

So far, the lack of awareness about the proposal seems its biggest opponent. An advertising campaign aimed at promoting the proposal will not begin until mid-June, but as most polls conducted show, more are for the sale of bonds than against it, however the undecided percentage is quite large.

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