Foremost on the agenda will be dealing with the state’s long-term, multibillion-dollar debts in workers’ compensation and state pension funds.

“Our workers’ comp debt is the Achilles’ heel of our state’s economy,” Manchin told supporters who braved Monday’s bitter cold to attend the hour-long ceremony on the south steps of the Capitol.

The session agenda is also expected to include a plan that would eventually privatize the state’s workers’ comp system, as well as proposals to toughen the state’s ethics law, and to restructure some departments in state government.

Manchin was about midway through his 18-minute speech when he announced he would call the special session — a topic of speculation practically since election night — on Jan. 24.

“I firmly believe that in order to create more good jobs in West Virginia, this system must be fixed, and it must be permanently fixed now,” Manchin said of the roughly $3 billion of unfunded liabilities in the Workers’ Comp Fund. “We cannot afford to wait even one more minute.”

Although details were sketchy Monday, legislators said Manchin’s plan will call for selling bonds to fully pay down the workers’ comp liability, and to pay down part of the $6.5 billion of unfunded future debts in the state teachers and various public employee pension funds.

Senate President Earl Ray Tomblin, D-Logan, said Manchin’s plan would take $230 million a year in both new tax revenue and revenue shifted from other sources, including state lottery and infrastructure funds, to pay off the $3 billion of workers’ comp revenue bonds.

Funding sources for the revenue bonds reportedly being discussed include:

• An increase from 5 percent to 6 percent in the base rate for the state severance tax on coal, natural gas and timber, which would generate about $22 million a year.

• Suspending the Capital Reinvestment Fund, which allows the state’s four racetracks to recapture up to 3 percent a year of video lottery profits — roughly about $12 million a year — to build hotels, restaurants and other guest amenities at their facilities.
• Repealing certain exemptions in state sales tax collections. Under current law, there are pages of exemptions for specific products and services, including practically all professional services.

  There also has been discussion of instituting a payroll tax to pay down the workers’ comp liability.

  “I don’t think he’s settled on what he’s going to do. That’s what he’s talking about,” House Majority Leader Rick Staton, D-Wyoming, said of possible sources of revenue.

  Staton said Manchin is determined, almost obsessed, with paying down the unfunded liabilities.

  Tomblin said the key issue to tie Manchin’s workers’ comp package together is to determine exactly how the $230 million a year in revenue bonds will be funded.

  Tomblin met with Senate Democrats in a closed-door caucus for about 2 1/2 hours Monday to discuss the special session agenda.

  He said the agenda would include a proposal to privatize workers’ comp by eventually creating a freestanding Employers’ Mutual.

  That would be similar to the legislation that transferred doctors who had medical malpractice coverage through the state Board of Risk and Insurance Management into a private, freestanding Physicians’ Mutual last year.

  The government reorganization plan will emphasize restructuring and reducing the myriad state boards and commissions, he said. Manchin’s plan would also restore the governor’s authority to appoint the heads of the various boards and state agencies.

On ethics reform, Tomblin said Manchin would “probably” use the recommendations of the Ethics Commission as the groundwork for his proposal. Those recommendations include giving the commission authority to initiate investigations of possible ethics violations.

As for the length of the special session, Tomblin said, “I’d say a minimum of five days.”

He said it’s possible the Legislature may start work on complicated issues such as Worker’s Comp privatization in special session, then reintroduce the legislation when the 2005 regular session opens Feb. 9.

Manchin has scheduled a news conference this morning to outline his special session agenda.

On Monday afternoon, Manchin was undeterred by temperatures in the teens, giving an upbeat inaugural address, pledging “to get our state’s house in order, and open our state for business.”

Manchin spoke beneath a Capitol dome shrouded in plastic for repairs and regilding, and incorporated the construction into his speech.

“As my late father, John Manchin, used to say, ‘The road to success is always under construction,’” Manchin said. “While we fix our sacred Capitol dome, we will re-engineer our government, repair our schools and revamp our economy. Whatever it takes, we will get this job done.”

But a surcharge on employers’ workers’ comp premiums is expected to be one of the major components to raise $230 million a year. That money would be used to pay off the proposed sale of $3 billion in revenue bonds, sources say.

A 10 percent surcharge on employer premiums would bring in about $60 million annually.

Workers’ Compensation Executive Director Greg Burton said Manchin’s proposal would reduce employer premiums, even with the surcharge.

That’s because 25 percent to 30 percent of employers’ current workers’ comp premiums go to pay interest on the massive unfunded liability.

“One of the proposals is to take back some of this money ... as a surcharge on premiums,” Burton said.

Employers could expect to see an overall decrease in premium costs of 15 percent to 20 percent with passage of the bond legislation, even with the surcharge, Burton said.

Manchin confirmed Tuesday that the legislation will require $230 million a year in state revenue, and said discussions are ongoing on revenue sources beyond an increase in the base rate on the severance tax on coal, natural gas and timber.

That rate, currently 5 percent, is expected to be increased to 6 percent.

Another expected funding source is state video lottery profits currently directed to the state Infrastructure Council to help fund water, sewer and other development projects.

The 2005-06 budget by the Wise administration provided $40 million of lottery funds for infrastructure.

Those sources don’t fully fund the $230 million, and discussions are ongoing among the administration and legislators to develop the final pieces of the funding puzzle.

Steve Roberts, president of the West Virginia Chamber of Commerce, said most businesses would welcome even a small reduction in workers’ comp premiums, especially if the Legislature resolves the longstanding burden of the unfunded liability.

“For anybody who would look down his nose at a 15 percent discount, he should consider the alternative. If we do nothing, there likely would be a substantial rate increase this year,” he said.

Roberts and Burton were among a large number of business, labor and state officials who turned out for a Tuesday morning ceremony as Manchin signed a proclamation calling the Legislature into special session, beginning Jan. 24.

Manchin stressed that the state must address the budget crisis in Workers’ Comp to attract new business investment.

“As a businessman, if I’m paying a high premium, the bottom line is, it’s really hindering me from expanding my company,” he said.

In addition to the revenue bond sale for Workers’ Comp, the agenda is expected to include proposals to toughen the state ethics law, restructure some elements of state government, establish the framework for eventually privatizing Workers’ Comp, and passing a resolution for a special election later this year, asking voters to authorize the sale of $4 billion in general obligation bonds to pay down unfunded liabilities in various state pension funds.