BRADENTON, Fla. — West Virginia Gov. Joe Manchin Wednesday night focused on education, jobs, and drug deterrent initiatives in his state of the state address.
He did not reveal any big-ticket spending plans or plans for bond issues in his speech or his executive budget proposal for fiscal 2009, which also was unveiled Wednesday.
Manchin, a Democrat, is seeking reelection this year. And since it is a major election year for the state, the legislative session that also began on Wednesday and runs through March 8 is expected to be fairly noncontroversial.
Manchin’s proposed $4.275 billion general fund budget for fiscal 2009 is less than a 1% increase over the current budget, largely because of a projected general revenue growth rate of only 1%, compared with the 4.4% increase the state anticipates in the current year. The executive budget he is required to submit does not include appropriations for state road funds or federal funds.
The budget proposal includes contributing $298.1 million toward unfunded pension liabilities and $60 million toward other post-employment benefits. The state’s OPEB liability is now estimated at $3.4 billion. The budget also includes 3% annual raises for teachers and public employees.
“Since 2004, we’ve tackled our state’s debts, putting an additional $1.7 billion toward our retirement systems, so that our state employees can be confident that the money they’ve been working so hard to earn will be there when they need it,” Manchin said in his speech. “We’ve also done something that I don’t think anyone ever thought could or would be done. We’ve cut the size of state government for the second year in a row, the first consecutive decrease in employees in at least 16 years, showing that the days of ballooning state payrolls are officially over.”
The state’s solid fiscal management was one reason why Standard & Poor’s on Wednesday also affirmed the state’s AA-minus general obligation debt rating. The state’s GOs are rated AA-minus by Fitch Ratings and Aa3 by Moody’s Investors Service.
West Virginia has $1.07 billion of outstanding GO bonds, including principal and interest, through 2027. The state also has $3.37 billion of revenue bonds, including principal and interest, outstanding through 2047.
The state’s moderate debt burden and willingness to tackle large-scale financial challenges, such as addressing the state’s unfunded pension liability and OPEBs, were also reflected in the state’s rating and a stable outlook, Standard & Poor’s analyst John Sugden-Castillo said.
But while the state is addressing pensions and OPEBs, Castillo said those long-term liabilities are offsetting factors as well as an economy with limited depth and diversity. As of July 1, 2006, the state had a $5.4 billion combined pension system unfunded liability.
In fiscal 2007, the state made contributions of $383 million above the required funding level into the Teachers’ Retirement Pension System, or TRS, and securitized tobacco settlement revenues that resulted in an additional $875 million contribution to TRS. The unfunded actuarial accrued liability is now estimated at $4 billion for the combined system.
“When combined, these contributions bring the TRS funding level to an estimated 51.9% which, while still among the lowest in the nation, is a significant improvement from fiscal 2006,” Castillo said.