Police, fire pension debt eating city budget
By Dave Peyton

A few days ago, George Hohmann, the business editor for the Charleston Daily Mail, wrote a thoughtful column about the Kroger strike that called Wal-Mart the silent but very rea 800-pound gorilla in the labor dispute.

The bone of contention in the strike is health care benefits for striking Kroger employees.  Kroger is unwilling, so far, to grant premium health care benefits to union employees because of Wal-Mart's entry into the discount grocery business. There's no doubt Wal-Mart is hurting the retail grocery business in which Kroger is a major player and Wal-Mart's impact is likely to grow, especially in the Huntington area where two new Wal-Mart superstores will open next year.

There's a similar 800-pound gorilla silently prowling the corridors of Huntington City Hall. The beast carries a ledger book with him. And one of these days, the city is going to owe him big time.

He carries the due bills for Huntington's police and fire pension funds. And  sooner rather than later, the cost of servicing these funds is likely to get out of hand. Some can envision the day when half of the city's annual budget will have to be spent on paying monthly pensions for these city employees.

A report before the West Virginia Legislative Interim meeting last weekend noted that the debt for municipal pension funds in West Virginia is in the hundreds of millions of dollars. In time there will be specific reports for each of West Virginia's major cities. But for now, it's clear that the pension funds are not even close to being solvent.

What happened? Money that was supposed to go into the funds to keep them solvent has been diverted, not only in Huntington but also in most of the state's shrinking cities and towns. The fact the cities are shrinking and unable to levy their own taxes is a primary reason the money has been diverted to other projects. City councils and mayors get more political bang for the buck if they do something voters can see instead of putting money in a pension fund no one regards as important except those who are to be recipients.

Cabell County Circuit Judge David Pancake has ordered the city to apply enough money to the funds to make them solvent. The city hasn't done that, but Pancake has not hauled them into court for their refusal to follow his orders.

The 800-pound gorilla has appeared in public on occasion in the past few months, but he has virtually been ignored. It appears as if municipalities believe the state will solve the pension problem for them. The question however is whether the state has the money or the bonding capacity to pay the cities’ retirement bills. In case no one has noticed, it appears as if the state is nearly as broke as the cities.

It's clear that the contract between the city and its retirees is virtually immutable. Money to pay the retirees must come off the top before any other money is allocated for anything else. But that big crunch is apparently still a few years away, so those currently serving in elected positions ignore it because they hope and believe the disaster won't happen on their watch.

It’s clear that no one at City Hall has a vision for the future of these funds. The biblical admonition still holds true: Where there is no vision, the people shall perish. In this case, municipalities may perish.

Thus, it would be legitimate, and even important, if candidates for mayor in next year's municipal election were asked what their plans are to solve the pension fund crisis.

 

In fact, it might be the most important question anyone can ask them. After all, the 800-pound gorilla still stalks the city, and he's growing bigger every day.