How West Virginia Learned the Cold Truth about Resource Abundance and Wealth
Senate Bill 461 originally called for establishment of a Future Fund to pool 25 percent of oil and gas severance tax revenue in excess of US$ 175 million. With revenues forecasted to hit US$ 176 million in fiscal year 2015-2016, state legislators chose the US$ 175 million benchmark to allow the government more oil and gas proceeds to aid in balancing the state budget. The bill, proposed by WV Senate president Jeff Kessler (D), reached the floor of the state House of Delegates after passing the House Judiciary Committee on March 3rd and the House Finance Committee on March 5th.
It now goes to the Governor Earl Ray Tomblin to sign.
The House Finance Committee axed the US$ 175 million milestone, calling instead for the future fund to reap 3 percent of all gas, oil, coal, sandstone and limestone severance tax revenues which would have been deposited in the state’s general fund. Moreover, the committee amended the bill to freeze funding of the investment pool during times of financial stress if the state needs additional funds or has to slash spending. Finally, it capped the amount lawmakers can draw from the fund in a given year at the average interest income of the preceding five budget cycles.
A proposed constitutional amendment accompanies the bill, barring legislators from tapping the fund until 2020 and setting limits on where interest and investment income can be spent. If this joint resolution is passed by voters in November, spending of fund interest and income will be restricted to five general areas:
- Workforce development and education enhancement
- Infrastructure projects
- Economic development and diversification
- Tax relief measures for state citizens and businesses
- Cultural and historical improvements/preservation
Passes in WV House and Senate
The House of Delegates amended Senate Bill 46. Both the Senate and House have approved the changes to the Future Fund bill. It now goes to the Governor Earl Ray Tomblin to sign.
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