CHARLESTON - A state Senate committee has approved a proposal to invest some of West Virginia's oil and natural gas revenues for future infrastructure and economic development.
The Future Fund Bill would set aside 25 percent of the severance tax revenues collected from private oil and gas companies, once the fund hits $175 million. The fund would collect interest for six years before being used for economic development projects, building infrastructure and increasing teacher salaries.
Daniel Hall, the Wyoming Democrat who sponsored the measure, said a $175 million benchmark protects funds needed to sustain government operations and allows a large portion of the tax revenue funds to be spent on current needs while saving for the future.
Oil and natural gas revenue is increasing and expected to continue to along with gas prices and expanded natural gas drilling in the state's southern shallow wells, Hall said. If these numbers continue to increase, Hall anticipates this fund to be a significant asset.
Sen. Jeff Kessler, a Democrat from Marshall and the Senate president, said if a fund of this nature had been created with just 1 percent of oil severance tax in 1975, the state would have had an estimated $800 million in interest each year and would have the capability to bring every road in the state up to standards in just two paving cycles.
"We need to fix the roads in our state and it is going to cost $1 billion to do it and we don't have the money," he shared. "By starting now and saving for our future we can accomplish some of these big projects. I consider this a progress fund. We can leverage the increased growth we are going to see in this tax pool and save a portion instead of spending every penny."
Many other mineral-rich states such as Wyoming and North Dakota save a portion of their revenue from natural resources for future economic growth. Kessler pointed out that Texas funds its entire higher education system through a similar fund.
The Senate Government Organization Committee approved the bill Wednesday. It now moves to the Finance Committee.
The proposed bill dictates the West Virginia Legislature cannot spend any interest from the Future Fund until 2020. Possible infrastructure projects mentioned in the bill include post-mining land use, water or wastewater facilities and flood control.