WHEELING - The House Finance Committee on Wednesday approved Senate President Jeff Kessler's West Virginia Future Fund proposal, but not before making several significant changes that would bring coal revenue into play and only allow investment in the fund when financial times are good.
The bill is scheduled to receive its first reading on the House floor today, leading up to a potential final vote Saturday, the last day of the regular session.
During a Wednesday evening session, the committee struck the provision of the bill setting a $175 million benchmark for natural gas severance tax collections before any money would be deposited in a permanent investment fund. Instead, 3 percent of all severance tax proceeds from coal, natural gas, oil, limestone and sandstone that otherwise would have gone to the state's general fund would be deposited in the Future Fund.
No money could be added to the Future Fund in years during which the state needs to dip into its rainy day fund or impose mid-year spending reductions or hiring freezes to avert a budget shortfall. Committee members also inserted a provision forbidding legislators from spending any more than the average interest income from the fund in the previous five budget cycles during any one year.
Committee members also advanced a proposal to place a constitutional amendment before voters that would solidify certain limitations on future spending of interest income from the fund.
These include a provision making the fund's principal balance untouchable, a moratorium on spending from the fund until at least fiscal year 2020 and limiting acceptable uses of the money to economic development projects, infrastructure and education enhancement.
Those limits are written into the bill, but Kessler, D-Marshall, has said writing them into the state constitution is critical to prevent future Legislatures from spending the money frivolously by merely changing the law.
Kessler has pointed to the success of similar funds established for oil revenue in states such as Alaska and North Dakota. This is the fourth straight year he has introduced a Future Fund bill, but it's the first time the idea has gained any traction.
According to Kessler, had West Virginia established a permanent fund for coal 40 years ago, saving just 1 percent of all revenue, the account would hold about $8 billion, bringing in hundreds of millions of dollars each year in interest income that could be used to fix roads, bridges and increase pay for teachers.