West Virginia daily

The city of Charleston will face a financial crisis in the coming years if it doesn't offset the crippling costs of police and fire pension plans soon, city officials said.

Charleston's retirement fund for police and firefighters has a $147 million unfunded liability, and that number will only grow, said city treasurer Victor Grigoraci.

"This is a real mortgage on our city," said Grigoraci, a certified public accountant. "The $147 million is what it takes to pay off the mortgage today. If we treat it like a mortgage and continue to not pay it, we will accumulate additional unfunded liability."

The city's unfunded liability has increased gradually since 1991, when the Legislature offered municipalities an alternative contribution method to the state-mandated pension plan. The contribution method made payments easier for municipalities.

But it also caused the unfunded liabilities to grow.

Under the method approved in 1991, a city each year must pump at least 107 percent of its previous year's allocation into its pension plans.

Since 1999, Charleston's unfunded liability has jumped from $118 billion to $147 million.

Cities in West Virginia have accumulated $553 million in unfunded liabilities, and pension woes are largely responsible for the city of Huntington's $2.5 million deficit projected for its 2005-06 budget. A study a few years ago showed that half of Huntington's budget would soon go toward paying retiree benefits.

Charleston could face a similar predicament if nothing changes within the next decade, Grigoraci said.

"This is a serious problem that continues to grow," Grigoraci said. "We've made an effort to work with the Wise and Manchin administrations to address the problem because it's outside the city's hands."

The state would have to pass legislation giving municipalities more options in handling the retirement funds.

Delegates introduced a measure this past legislative session, but it died in the Senate after passing the House. The bill would have given cities flexibility in making the payments -- during years when their budgets were stronger, they could contribute more and in years when they struggled, they could pay less.

"It was an attempt to give some flexibility to the funding model that cities have to deal with now," said House Judiciary Chairman Jon Amores, D-Kanawha, one of the bill's sponsors. "Charleston is unintentionally being handcuffed with its financing options."

Sen. Dan Foster, D-Kanawha, said the bill died because of time constraints. Otherwise, he believes the legislation would have passed.

Foster said lawmakers could take up the issue again if a special legislative session takes place later this year.

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