Nothing To Lose On Future Fund Bill
WHEELING – With West Virginia poised to see its natural gas severance tax revenue double in a year’s time, state Senate President Jeff Kessler believes this could be the year his West Virginia Future Fund idea takes off.
Under legislation Kessler, D-Marshall, introduced Friday, the first $175 million in drilling-related revenue the state received in any given year would continue to be distributed as normal between the general fund and producing counties. But 25 percent of any revenue received beyond that amount would go into an investment fund which would accumulate interest for generations to come.
Kessler based the new benchmark on Gov. Earl Ray Tomblin’s six-year budget forecast, which projects oil and gas severance tax collections of $147 million by the end of the current fiscal year on June 30, and $176 million for the 2014-15 budget year.
But the level of investment he’s seen, particularly in his home county, has him convinced those forecasts are conservative.
“If I’m right, we’ll be able to save a bundle,” Kessler said. “If I’m wrong, we haven’t lost a thing.”
Persistence appears to have paid off for Kessler, whose plan has failed to emerge from committee the last three years.
But this time, 31 of 34 senators are listed as co-sponsors of the bill – all except Sen. Mitch Carmichael, R-Jackson; Bill Cole, R-Mercer; and Douglas Facemire, D-Braxton. Last year’s version had 10 co-sponsors.
Kessler attributes the growing support to a trip he and almost 20 other legislators took last summer to North Dakota, an oil-rich state that banked $1.5 billion within 20 months of establishing its own Permanent Fund, and – not confidentially, Kessler believes – experienced the highest population growth rate in the country last year.
“I think seeing is believing,” Kessler said.
This bill differs significantly from last year’s version in a couple significant ways that may increase lawmakers’ appetite for the idea. It raised the revenue benchmark from $69 million to $175 million, and slashed the number of years the state must leave the fund alone before spending any of the interest from 20 to six.
“The next two budget years, this and next, are supposed to be quite daunting and we may be operating in the red. … (The fund) will not affect any estimated revenues for the next two years,” Kessler said.
While Senate Bill 461 would the framework for the Future Fund, a companion measure aims to how interest from the fund may be spent, in the form of a constitutional amendment that would go before voters. It would limit uses to improving infrastructure, providing tax relief, economic development initiatives and education enhancement – something Kessler believes is important to keep future legislators from spending the money frivolously.
“We’re 49th or 50th in everything. … If we’re ever going to break the cycle of poverty, we have to improve our education attainment level. … We’d love to get rid of our business inventory tax, but we don’t have the capacity to do it,” Kessler said.
The legislation eventually would direct a portion of interest income from the fund back to gas-producing counties. Some money also would be earmarked specifically for former coal counties – many of which are among the state’s most economically depressed – that Kessler said lost out as a result of the state’s failure to plan ahead when that industry was at its height.