Legislature takes field trip

WHEELING – West Virginia Senate President Jeff Kessler believes past state leaders squandered a golden opportunity to build wealth for future generations when the coal industry was at its height – and he doesn’t want to let a second chance offered by the natural gas boom slip away.

On Wednesday, he will lead a bipartisan group of 18 state lawmakers to meet with officials in North Dakota, a state that’s invested a portion of its oil and natural gas severance tax revenue over the last two years in a “Legacy Fund” that now holds more than $1.3 billion. The group plans to return Thursday evening or Friday morning.

Kessler said there are other success stories, as well. Alaska’s Permanent Fund, he pointed out, has done so well the state mails dividend checks to every man, woman and child who has lived in the state at least a year – with annual payouts averaging about $1,160 per person between 2009-12.

But legislation creating a similar program for the Mountain State, the “West Virginia Future Fund,” has failed to pass out of committee each of the three times Kessler has sponsored it since 2011. He hopes this week’s trip will change that.

“I think that it should build not only enthusiasm for the (Future Fund), but understanding that it’s not pie-in-the-sky, ‘pollyanna’ discussion,” Kessler said of the North Dakota trip. “It’s been implemented.”

The list of lawmakers – 14 Democrats and four Republicans – expected to make the trip includes three Northern Panhandle representatives: Kessler, Sen. Rocky Fitzsimmons, D-Wheeling, and Delegate Phil Diserio, D-Brooke.

The roster also includes Senate Majority Whip Bill Laird, D-Oak Hill, and several committee chairs from both chambers, each of which will send nine members.

Kessler said a few industry leaders, including Corky DeMarco, executive director of the West Virginia Oil and Natural Gas Association, and representatives from Dominion Resources and Williams Partners – two of the key players in Marcellus Shale development in West Virginia – also are expected to tag along.

“We’ve got a nice cross-section,” Kessler said.

The group will leave Charleston on two or three separate flights to Bismarck, N.D., following the conclusion of interim committee meetings Wednesday afternoon, Kessler said. They will stay in a hotel overnight in preparation for a full day of meetings and presentations Thursday, and return home that night or Friday morning, depending on the availability of flights.

Morning sessions will begin at 9 a.m. Thursday and include discussions with North Dakota legislative leaders on natural gas and oil development in their state; the constitutional amendment by which North Dakota established its Legacy Fund; and oversight measures enacted to ensure the fund is providing the benefits promised to voters. The West Virginia delegation also will hear from industry leaders on fracking and the industry’s impact on infrastructure before breaking for lunch.

Afternoon activities include a presentation on North Dakota’s Oil and Gas Impact Grant program, through which the state allocated $240 million this year to benefit communities most impacted by the rapid development of the oil and shale gas industry. There will be additional discussion about the legislative process to establish a legacy fund and a tour of the Senate and House chambers at the North Dakota State Capitol before departing around 4 p.m.

Kessler estimated the trip will cost $18,000 to $20,000, or roughly $1,000 per person – an expense he believes is well worth it.

He predicts severance tax revenue will skyrocket once companies develop the infrastructure necessary to get natural gas to market. With one company, Williams Partners, spending $4.5 billion – more than the state’s entire general fund budget for this year – on processing facilities in Marshall County alone, Kessler sees boundless opportunity.

“Right now, they’re just building the facilities. … Once the plants … and (pipelines) are in place, you’re going to see it grow exponentially,” he predicted.

The most recent version of Kessler’s plan would have set a benchmark for natural gas severance tax revenue based on recent yearly collections, and directed 25 percent of any revenue received beyond that benchmark to the Future Fund in subsequent years. It also expressed an intent to wait at least 20 years before dipping into the fund for any reason.

Those details are negotiable, he said. But whatever form the plan takes, he believes it’s imperative West Virginia chart a different course than it did with coal.

“Whatever we got, we spent that year,” Kessler said, adding that many of the state’s top coal-producing counties are “some of the most distressed counties today. … I want to avoid that happening again.”

Not all of Kessler’s fellow legislative leaders agree with that approach. House of Delegates Minority Leader Tim Armstead, R-Kanawha, said any increase in natural gas severance tax revenue may be needed to cover a projected $300 million budget gap as early as the 2015 fiscal year.

But Kessler believes the state can establish a Future Fund and still balance its budget without tax increases, at least in the short term.

“The real difference legislators can make is in the policy choices – in how they spend the money,” he said.