Senate Passes Future Fund Bill
WHEELING – Legislation creating a permanent investment account for natural gas severance tax revenue in West Virginia sailed through the state Senate without opposition Friday, along with another bill to encourage development of a private market for flood insurance in the state.
Both bills now move to the House of Delegates, where Senate President Jeff Kessler is “cautiously optimistic” about the prospects for his West Virginia Future Fund proposal, an idea he’s been pushing since 2011. The state has lived “hand to mouth” off its natural resources for too long, he said – but the natural gas boom has given West Virginia a second chance.
“We should leverage it to create some jobs, opportunity and wealth for our people this time,” Kessler, D-Marshall, said. “There’s no reason to just give it away or spend it as fast as it comes in.”
The Future Fund bill calls for 25 percent of any annual oil and gas severance tax revenue collections beyond $175 million to be deposited in the fund, starting with the new fiscal year that begins July 1. Gov. Earl Ray Tomblin’s six-year budget forecast projects oil and gas severance tax collections of $147 million by the end of the current fiscal year, and $176 million for the 2014-15 budget year – meaning significant investment in the fund would be unlikely before 2016.
The principal balance of the fund would remain untouched, and the bill also requires state officials to allow the fund to accrue interest until at least 2020 before spending any of it. After that could use it only for three purposes: economic development projects, infrastructure or education enhancement.
Kessler also is seeking to prevent future Legislatures from altering those spending limits by writing them into the state constitution. If both houses approve, a constitutional amendment would go before voters in November.
Similar funds already in place in oil-producing states such as North Dakota and Alaska have generated billions, and Kessler doesn’t believe it’s a coincidence that North Dakota ranks at the top of the nation both in population growth and overall well-being of its residents – categories in which West Virginia ranks 49th and 50th, respectively.
“They weren’t there a few years ago,” Kessler said of North Dakota.
The flood insurance measure, meanwhile, is intended to provide alternatives for thousands of Mountain State property owners who purchase such coverage through a federally run program and are facing massive premium increases. Many have no choice in the matter, as federal law requires homeowners in flood zones to maintain coverage at least equal to their outstanding mortgage balance.
Lead sponsor Sen. Rocky Fitzsimmons, D-Ohio, said no private carriers are licensed to offer flood insurance in West Virginia. State law allows insurance agents to seek proposals from companies licensed in other states, known as “surplus lines” insurers, but current rules make it difficult to do so.
The bill also authorizes insurers to offer policies that still meet federal regulations, but allow property owners to take on more risk by purchasing policies that insure for less than a home’s full replacement cost.
“Our flood risk is unique here. We don’t live on the coast. … (Flooding is) predictable, and people have been living in those areas for years. They take extra precautions to prepare for those risks,” Fitzsimmons said.
Some have expressed skepticism about private market appetite to write flood insurance policies. Fitzsimmons said it will take some time for a private flood insurance market to develop, and acknowledged there’s no guarantee it will happen at all.
“But it doesn’t cost the state of West Virginia a penny to go down this route. … It’s much better to take action than to do nothing,” he said.