February 28, 2011

By Phil Kabler

CHARLESTON, W.Va. -- On an 9-to-8 show of hands Monday, members of the Senate Finance Committee rejected a bill intended to help the state get control of a massive $8 billion unfunded liability for future health-care costs for retired public school and state employees, commonly known as OPEB.

The vote also effectively killed any Senate efforts to increase state tobacco taxes this session.

Afterward, the bill's lead sponsor blamed the setback on opposition among some senators to any tax increases this session.

"In my opinion, it was not a vote against OPEB. It was a vote against the funding source," said Sen. Brooks McCabe, D-Kanawha.

Earlier Monday, committee members had amended another bill to increase state tobacco taxes (SB362) into the OPEB bill (SB566).

Both bills proposed taking $50 million a year of new revenue from proposed increase in the cigarette tax from 55 cents to $1.55 a pack, to provide a total of $1 billion of revenue over 20 years to help pay down the massive health-care deficit.

"We were trying to find a funding source that was logical and appropriate," McCabe said of the tobacco tax increase. "We've known for a long time there was opposition among members to any tax increase."

Despite the bill's apparent demise -- it needed to advance to the Senate floor by Monday evening in order to pass by Wednesday, the last day the Senate can pass Senate bills this session -- McCabe said the issue of the OPEB liability will not go away.

"I believe now is the time to address the unfunded liability of OPEB," he said. "It's going to be more difficult next year, in an election year."

Without the legislation, there is nothing to control large increases in Public Employees Insurance Agency premiums for retirees in the future, McCabe said.

Under the bill, $45 million of the annual $50 million of tobacco tax revenue would have gone to offset annual increases in retiree PEIA premiums, he said.

"What we're trying to do is smooth out, as much as possible, increased premiums for our retirees," McCabe said.

If the legislation cannot be resurrected this session, McCabe said he would hope the Legislature would take it up in a special session later this year.

"I don't know what the answer is, but I will say it's not over," he said.

As amended Monday, the rejected bill would also have provided $34 million a year for Medicaid, $6 million a year for tobacco control efforts, and $1 million a year for five years to fund a new School of Public
Health at West Virginia University, and $6 million a year to PEIA to cover the costs of providing coverage for autism spectrum disorders.

The House's version of the tobacco tax increase (HB2973) is currently in the House Finance Committee, and also appears unlikely to pass this session.

Also Monday, the committee:

* Advanced to the full Senate a watered-down version of legislation to create an intermediate appeals court in the state (SB307).

Committee members advanced the bill over objections from Mike Romano, president of the West Virginia Association of Justice, who said the new court would be costly and would slow resolutions of cases for state residents who have claims against businesses.

"I believe what the chamber's constituents want is another layer of courts," he said, referring to the state Chamber of Commerce, which supports the appeals court.

"Defense lawyers are going to make a lot of money off of this, because they're going to get to file one, or maybe two more appeals," said Romano, who said the delays will create a financial hardship for persons who have claims against insurance companies or other businesses.

"Unreasonable delay is now rampant in the system," he said.

Committee members rejected an amendment by Sen. Erik Wells, D-Kanawha, to include a sunset provision in the bill in order to review the costs of the intermediate court after five years.

Wells said he does not have confidence in a fiscal note estimating the cost of the appeals court at $5.2 million a year.

"We could really be in a situation where we could have a court system that costs $10 [million] or $15 million a year - who knows?" he said.

Committee members, however, raised concerns that the sunset provision could effect intermediate court judges in mid-term, and did not have a provision for dealing with cases pending in the appeals court, if the court were allowed to sunset.

* Advanced to the full Senate a bill intended to revitalize the West Virginia University Institute of Technology (SB486).

The bill requires the Higher Education Policy Commission to develop a plan by this fall, with an emphasis on reversing declining enrollment, improving retention and graduation rates, and promoting science, technology, engineering and math programs at the Montgomery campus.

"It allows the Higher Education Policy Commission to assume a leadership role in the revitalization of this particular institution," said Sen. Bill Laird, D-Fayette, a co-sponsor of the bill.

The full Senate passed the bill on Monday evening on a 29-0 vote, sending it to the House of Delegates, which has a companion bill on amendment stage (HB3068) on the House floor today