Eintime Conversion for education and research 05-14-2006 @ 16:53:10
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W.Va. Rejects $5.5B Pension Bond Proposal

Filed at 10:10 p.m. ET

CHARLESTON, W.Va. (AP) -- Voters on Saturday narrowly rejected Gov. Joe Manchin's attempt to repair West Virginia's ailing retirement system by selling up to $5.5 billion in bonds.

With 77 percent the state's 1,965 precincts reporting, about 54 percent of voters had rejected the pension bond measure, compared to 46 percent in support.

The state constitution required an amendment for Gov. Joe Manchin's plan to devote bond proceeds to the state's pension plans -- including its teachers pension, one of the worst-funded public pension plans in the country.

Manchin, a Democrat who took office in January, had been guarded about the special election's outcome before the vote.

''No matter what happens, I've always believed that people should vote on this,'' he said. ''I've tried to tell people that this is the better way, and we should try it.''

Manchin's office did not immediately comment on Saturday's results.

The defeat leaves in place a 40-year payment plan that relies on ballooning outlays from the state budget to aid the pension plans. This year's payment will take about $350 million from general revenue.

Estimated turnout for Saturday's election was between 10 percent and 15 percent, said Ben Beakes, chief of staff to Secretary of State Betty Ireland. A low turnout had been expected because of the complexities of the proposal and the lobbying efforts of the head of one of the state's largest employers.

Massey Energy CEO and Chairman Don Blankenship spent several thousand dollars in personal funds on radio, television and direct mail ads, as well as automated phone calls, urging voters to defeat the ballot issue.

Blankenship argued that the state would be taking too large a risk by sending such a large sum to Wall Street. The mining executive also attacked the plan's provision to award fees of up to 1 percent of bond proceeds -- as much as $55 million -- to lawyers, bankers and others needed for the deal.

West Virginia is not alone in its pension woes: The 127 state and local plans tracked by the National Association of State Retirement Administrators suffer from a combined shortfall of $279 billion.

For West Virginia and 12 other states, unfunded pension liabilities exceed the state budget.

West Virginia's budget for the fiscal year beginning July 1 will be $3.19 billion compared to the teacher retirement system pension shortfall of $5 billion. For every dollar the teacher retirement system has on hand, it owes $3.50 in promised benefits.

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