Employers in West Virginia will see a 15 percent reduction in workers' compensation premiums starting Jan. 1, 2006, under a new bill signed into law by Gov. Joe Manchin. The bill, S.B. 1004, will also privatize the state's system in an effort to attract new businesses.
"This landmark legislation sets the stage for real economic progress in this state," said Manchin. "It gives our current employers a reason to stay in West Virginia and provides potential new employers with a reason to consider bringing their companies here, along with the good paying jobs with health care benefits that our people so desperately need and deserve."
He estimated that the move to reduce workers' comp premiums by up to 15 percent next year would save employers approximately $160 million because about a quarter of the current workers' comp premiums will no longer need to be dedicated to interest payments.
Under the plan, $230 million will be drawn each year for 20 years from various sources to pay off a $3 billion budget shortfall. The $230 million would come from a new severance tax on coal, oil, timber and gas companies.
The annual funding includes a $90 million increase in the state's tax on extracted natural resources. The tax hike rankled Manchin's allies in the coal, natural gas and timber industries.
While Massey Energy Co., the state's largest coal producer, remained a strong critic of the governor's plan, the administration said premium reductions for coal, natural gas and timber will help make up for the increases in taxes.
In addition, a privately run insurance company will be created beginning Jan. 1, 2006.
"With implementation of this second reform legislation, workers' comp no longer will be an Achilles' heel to economic development in our state as we transition from a state-run monopolistic system to an open market of private insurance carriers," said Gregory A. Burton, executive director of the West Virginia Workers' Compensation Commission.
April 1, 2005
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