Governor Announces Plans For November Special Session

Governor Announces Plans For November Special Session

As a result of extensive analysis of cash flows, claims liability and projections undertaken during the course of the privatization of the State's workers' compensation system, including analysis conducted by the State's financial advisor, Public Resource Advisory Group (PRAG), Gov. Joe Manchin will call the legislature into Special Session at 6 p.m., Sunday, November 13, in order to make some technical corrections to the Workers' Compensation Debt Reduction Act (SB 1004). These corrections are designed to save the State of West Virginia's taxpayers and employer community in excess of $100 million.

The main purpose of the session, which will take place during already scheduled legislative interims, is the passage of several technical corrections to the Workers' Compensation Debt Reduction bill. The corrections are comprised primarily of board of director level changes aimed at minimizing the extent to which employers' premium dollars will be taxed by the Federal government. In addition, in order to maintain public benefits and to enhance the competitive environment being created, the State will continue to be responsible for the final disposition of the Coal-Workers' Pneumoconiosis Fund.

The Governor is required to sign a proclamation prior to BrickStreet making its rates public, which it would like to do at least 30 days prior to January 1st. The Governor desires to have these changes made prior to making his proclamation in order to assure that the potential benefits of such changes are realized by the workers' compensation system and the employer community.

Although the final actuarial report of the Workers' Compensation Commission's Fund has not yet been released, PRAG has also advised the Governor that the financial condition of the old Worker's Compensation Fund has improved, as a result of which they do not believe that a bond issue is necessary at this time. Because of this advice the State will avoid paying costs of issuing bonds and interest payments on such a bond issue - the latter alone will save the state from paying up to approximately $75 million in interest a year (based upon 5 percent interest on a $1.5 billion bond). PRAG will continue to monitor the situation closely and if the need arises or the conditions change they will advise the state as to how to best leverage its bonding capacity.

"This is why we brought in a well-respected financial advisor such as PRAG," the governor said. "PRAG's knowledge and expertise enabled us to avoid incurring additional debt, and thus has already paid major dividends for the state of West Virginia and its taxpayers. As for the special session, if we have an opportunity to potentially save $100 million, I believe it is definitely worth pursuing. Major cost savings such as these are just a continuing part of our efforts to get our financial house in order and are why West Virginia is finally Open for Business."

http://www.wvgov.org/FullArticle.cfm?id=1290