EYEWITNESS LOCAL NEWSReport Says Charleston Could Be Headed To Bankruptcy; Mayor Denies
from Eyewitness News Online
Reported by: Kera Mashek
Web Producer: Kera Mashek
Reported: Jul. 31, 2013 9:03 PM EDT
Charleston , Kanawha County , West Virginia
The city of Detroit continues to move through bankruptcy proceedings, after becoming the largest city to face such financial ruin in US history. This week, the Washington Examiner reported that nine other major cities could follow suit: one of them, Charleston.
Charleston Mayor Danny Jones admits the city's struggled to dig out of serious pension debt, but there's a plan already being rolled out to secure the city's financial health long-term.
Police and firefighter put their lives on the line every day, no question. But in Charleston, these first responders are just some of the city employees who have helped drive up a massive pension debt., which currently sits at $262 million. Mayor Jones says the debt racked up because of state laws requiring gradual increases in the pension fund.
"Cities should be allowed to make their own pensions, and not have it decided by somebody that doesn't have to pay for it. When I first became mayor, 8 percent of our budget paid for this. Now it's 11.3 percent, and it will continue to increase," Jones said.
But thankfully, the same way lawmakers helped make the mess, they're also helping fix it.
"We have a 35-year plan to fix this. It's been codified by the legislature. We have the finances on track," said Jones.
The city's already gotten to the point where it's no longer paying any current retirees with money from the pension fund. All benefits come straight from the general budget., and a new half-cent sales tax starting in October will help secure the city's financial well being long into the future.
"We'll pay to refinance the Civic Center with part of it, and what's left over, maybe a few million dollars every year, we're going to use for the pension. So we're in good shape. We'll be in good shape, and this is not anything I need to worry about," Jones said.
The city will continuing to add money to the pension fund so once current debt is paid, new sales tax revenues collected and money no longer needed for the Civic Center bonds can be used to build the pension fund back up for future retirees.
In the long run, though, Charleston and the state of West Virginia's financial well-being will also hinge on improving the economy.
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