State lawmakers weigh natural gas trust fund
Senate President Jeff Kessler hopes the Legislature's recent trip to North Dakota will build support for his plans to create a natural gas trust fund in West Virginia.
West Virginia lawmakers, along with representatives of the state's business, industry and labor communities, flew to North Dakota last week for a day of meetings with state officials to discuss that state's Legacy Fund.
Kessler, who organized the trip, said the most important lesson from the trip is, "It's something that's tried and true and it works."
Kessler has introduced bills over the last several legislative sessions attempting to create a natural gas trust fund for West Virginia
"One of the criticisms is, 'Kessler keeps introducing it and it never gets passed,' " he said.
But North Dakota's Legacy Fund also took several years to finally pass the legislature.
"It has been done by a state very similar to ours and has created an opportunity for great benefit for that state. There's no reason we can't do something the same or similar," he said.
He said he hopes the trip will build support for his bill in the upcoming legislative session.
"It's not conservative or liberal to save money. It's just smart."
Sen. Daniel Hall, D-Wyoming, said he was intrigued by North Dakota's decision to place its Legacy Fund in the state constitution, preventing lawmakers from easily changing the laws that govern it.
North Dakota lawmakers are not allowed to access the Legacy Fund money until 2017, unless the move is supported by two-thirds of the Legislature.
"Maybe we need to have that discussion here: Do we need to create this fund constitutionally so we can't touch it?" Hall said. "I doubt you can trust politicians very long when there's money out there to be spent."
Hall said he would like to see the money protected for 20 years. He said there are many large expenses that could come in the future, like rebuilding bridges or overhauling sewer systems, that today's lawmakers cannot anticipate.
"If we would have done this with coal 40 or 50 years ago, southern West Virginia would be in a totally different situation," he said. "In 30 years or 50 years, when our grandkids are sitting back talking, I think they're going to say those legislators back in 2014 made one of the best decisions West Virginia has ever made."
West Virginia Center for Budget and Policy Executive Director Ted Boettner said the meetings were helpful because, traditionally, West Virginia has not been very good at saving money for the future.
"I think it was helpful to put that in perspective, to see other states are looking long-term," he said. "You can do the same thing here, it doesn't matter if (North Dakota's economy) is bigger."
He pointed out North Dakota also established its trust fund without raising taxes, but only redirected existing tax revenues. The trust fund received unanimous support in the Legislature when it was approved in 2011, and also enjoyed support from that state's oil and natural gas industry.
"It's odd to think anyone would be against that here," Boettner said.
Corkey DeMarco, executive director of the West Virginia Oil and Natural Gas Association, also attended the trip. He said it is important to remember a similar trust fund in West Virginia likely would not see returns as large as those enjoyed by North Dakota.
He pointed out oil is North Dakota's primary resource, and crude oil is trading at more than $100 per barrel.
"They are producing 820,000 barrels of oil per day, and they tax at 11.5 percent," he said. "The price of gas today was $3.48. And we're taxing it at 5 percent. If you taxed it at 100 percent, you couldn't make what North Dakota is making.
"In no way are we going to be making the kind of money North Dakota is making."
Still, DeMarco said he supports saving money for future generations, as long as all interested parties have a say in the creation of the fund.
"I think everybody wants to do the right thing, but there's a whole lot of skepticism about what the right thing is, if we're not all in a room talking about it," he said.
Demarco said the state should also avoid raising taxes on the gas industry, and follow North Dakota's example on property laws.
Lawmakers there have instituted forced-pooling laws, where landowners holding a small percentage of land can be forced into participating in oil or gas development if a majority of their neighbors have already signed on.