CHARLESTON — Two bills to provide pay raises for West Virginia public employees, including the budget bill for the next fiscal year, passed the Senate Saturday, but a bill ensuring the solvency of the state health insurance program for state workers could eat into those raises.

The Senate passed Senate Bill 150, the budget bill, unanimously Saturday afternoon after also unanimously voting for Senate Bill 423.

SB 150 would set the general revenue budget for fiscal year 2024 beginning July 1. The Senate version of the budget bill comes in at $4.399 billion, a 10% decrease from Gov. Jim Justice’s introduced budget of $4.884 billion.

Among other things, the Senate version of the budget bill includes a pay raise for public employees who are paid through the general revenue fund. SB 150 provides state employees with a $2,300 increase to base salaries. Executive branch public employees paid through special revenue accounts, such as the Division of Highways, would receive spending authority to also offer the $2,300 pay raise.

Salaries for troopers and other employees of the West Virginia State Police, public school teachers and school service personnel are separately set in State Code. These raises are in Senate Bill 423, which also provides them a $2,300 increase in base salaries. The cost of the Senate’s public employees pay raise proposal in both bills is $120.2 million.

The original version of the budget bill presented to lawmakers by Justice during his State of the State address on the first day of the 2023 legislative session on Jan. 11 included $115 million for another 5% average pay raise for state employees, teachers, school personnel and West Virginia State Police troopers and staff. It would make Justice’s fourth 5% pay raise for state workers.

But concerns were raised Saturday about another bill that could eat into the benefits of those salary increases for public employees. The Senate Saturday afternoon in a 29-4 vote passed Senate Bill 268 relating to solvency of the Public Employees Insurance Agency.

SB 268 addresses numerous issues facing PEIA. It sets the reimbursement rate for all healthcare providers at a minimum level of 110% of what Medicare reimburses providers, it sets numerous requirements for members of the PEIA Finance Board, it requires a five-year analysis of potential future costs to the program and an actuarial study of the plans offered by PEIA.

The bill also requires PEIA to return to an 80/20 employer-employee match during the 2023 fiscal year. The bill would change the price of the plan for spouses of PEIA plan participants who have access to health insurance coverage to the actuarial value of the PEIA plan, though this does not apply to spouses covered in the voluntary employer plan.

According to Senate Majority Leader Tom Takubo, R-Kanawha, SB 268 would provide the state $76 million in savings for the first year and more than $529 million in savings by 2027. Takubo said there have been no PEIA premium increases since 2012.

“What this plan does is it does make PEIA sustainable into the future,” Takubo said. “I think this goes a long way and makes us sustainable. We tried to address the fact there needs to be a strong actuarial plan so that we don’t get back into situations where we get underwater on this thing again. We put in measures to make sure there is a smoothing process so that for the future that state employees don’t see large premium spikes with the reserve fund.”

According to the most recent fiscal note available from PEIA, the bill would cost $27.7 million when fully implemented. If the state returns to a 80-20 match beginning in July, premiums could increase by 26% for employees and 25% for employers after July.

Senate Finance Committee Chairman Eric Tarr said the premium increases would be blunted by the $2,300 pay raise for public employees as well as the 21.25% personal income tax cut and the 100% rebate on vehicle tangible personal property taxes included in Senate Bill 2526 that passed the Senate earlier Saturday.

“Not a single state employee, when you do a $2,300 raise in this premium piece, gets hurt,” Tarr said. “State employees and this Legislature and the people of West Virginia, knowing their state employees are secure, should be thrilled with this. This is phenomenal.”

Senate Health and Human Resources Chairman Mike Maroney, R-Marshall, has long been a proponent of reforming PEIA.

“PEIA has been circling the drain since I’ve been here,” Maroney said. “There are so many resources going to PEIA because it’s not been run like an insurance plan, it’s taking away valuable resources from other parts of our state’s budget. That was getting exponentially larger and larger every year. This bill, yes, it raises premiums and that’s OK. That’s what every health insurance plan does…but it’s starting to morph PEIA into an insurance plan.”

SB 268 was opposed by two out of the three-member Democratic Senate Caucus. While Senate Minority Whip Bob Plymale, D-Wayne, supported the bill, Senate Minority Leader Mike Woelfel, D-Cabell, and state Sen. Mike Caputo, D-Marion, opposed the bill.

“I just have so many questions,” Woelfel said. “For the retirees and all those folks out there who are counting on us, I just have to speak against this bill. I just think there are too many variables, too many assumptions in place that may or may not come to pass.”

Caputo pointed to past comments by Justice that he would not allow premium increases to PEIA on his watch. As of Aug. 1, there are 10 PEIA salary tiers which increased by $2,700 due to Justice’s directive to not increase PEIA state fund premiums and the 5% average pay raise for state employees passed by the Legislature last year. With premiums frozen in place for years, the plan is close to an 83-17 employer-employee match.

“Mr. Governor, I hope you’re listening and I hope you still have the same position you stated publicly so many times throughout your administration,” Caputo said. “I hope maybe you’ll consider vetoing this bill and bringing this Legislature back to try to find a more viable solution.”

PEIA insures more than 230,000 state employees, local government employees and retirees including more than 31,000 non-state employees, such as municipal employees.