CHARLESTON, W.Va. — State legislators got some early good news about budget pressure today.
Jeff Fleck, executive director of the state Consolidated Public Retirement Board, told legislators that investment payoffs will reduce the amount the state has to pay into pension plans for the coming year by $32,803,000.
“As I’ve said it’s been a very good year,” Fleck told the Joint Standing Committee on Finance during legislative interim meetings.
The state budget has been a major undertaking the past two years as legislators went right up to the next fiscal year to make estimated revenue match expenses. For this past year, the general fund cut millions of dollars from higher education funding.
State officials have been describing an improved revenue picture over the past few months, leading most legislators to conclude that the budget puzzle won’t be so hard this year.
But there are also plenty of new spending proposals on the horizon.
Senate President Mitch Carmichael has advocated for a free community college idea. Most legislators seem favorable to a plan that would raise salaries for corrections workers. And the Justice administration would like to spend more on Commerce and Tourism endeavors.
The Republican majorities in both houses also have focused on a proposal to phase out the property tax for businesses over a period of years.
So the savings on pensions spending may be spoken for quickly. The general fund amounts to a little over $4 billion.
“I come bearing good news,” Fleck said as he began this morning’s presentation to legislators.
He said investments in pension funds paid off at a rate of 15.8 percent growth last year.
So for the Public Employees Retirement System, the state may be expected to kick in $10.2 million less than expected for the coming fiscal year, Fleck said.
For the Teachers Retirement System the state would contribute $8,066,000 less than expected.
Two levels of the retirement system for State Police troopers had different results. One represents an $8,700,000 savings. Another would have the state paying $336,000 above the estimate.
More savings has been accomplished by moving retirees into a new tier established two years ago. While only about 17 percent of state retirees are in that tier at this point, it still results in about $6,171,000 in state savings, Fleck said.
Speaking after the meeting, House Finance Chairman Eric Nelson cautioned that the savings presented by better-than-expected returns on retirement investment are only one part of the picture.
He said there are likely to be expense increases, such as those presented by healthcare for public employees, should be taken into account too.
“Obviously some positive news, and I think most of that was positive gains in our investments,” said Nelson, R-Kanawha.
“I’m sure the governor will have that as part of his total budget process because these savings help bring up the basic balances but they also are on the expense side — and we probably have some other expenses that are going up.”
Nelson expressed caution about the broad budget picture too.
“I’m not hearing any new revenue estimates because I believe current savings just like this, as well as other areas of government, will pay for some of the regular inflation growth,” he said.