West Virginia lawmakers soon will travel to North Dakota to learn about that state's Legacy Fund, in hopes of establishing a similar savings program here.
The 2-year-old trust fund, built with oil and natural gas tax revenues, already contains more than $1 billion in assets. State officials aren't allowed to touch that money until 2017, when interest generated from the account will flow into North Dakota's general revenue fund.
It will require a two-thirds majority in the state Legislature to take invested money from the account.
Senate President Jeff Kessler, D-Marshall, has long wanted to start a similar fund in West Virginia using natural gas tax revenues. And while West Virginia's delegation could learn much from the Legacy Fund's successes, they also should take note of some hard lessons North Dakota has learned along the way.
Lesson No. 1: Don't get greedy
North Dakota voters overwhelmingly approved the creation of the Legacy Fund in 2010. But just two years earlier, the public soundly defeated a very similar measure.
Although the Republican-led Legislature overwhelmingly supported sending the fund to voters for approval as a constitutional amendment, 64 percent of the public opposed the fund when it showed up on ballots in 2008.
Pam Sharp, director of the North Dakota Office of Management and Budget, said the difference between the two versions is simple: The current Legacy Fund takes 30 percent of all oil and natural gas tax revenues. The earlier, defeated version would have taken 50 percent.
"That wasn't even a close vote," Sharp said. "There was a lot of controversy about that."
Sharp said lawmakers agreed to go back to the drawing board following the original measure's defeat and came up with the 30 percent plan as a way to garner more public support.
The fund showed up on ballots again in 2010 and was approved with 64 percent of the vote.
Lesson No. 2: Put it in the constitution
Years before North Dakota formed its Legacy Fund, the state established a "permanent oil tax fund." That fund had essentially the same goal as the Legacy Fund, except for one thing: It was hardly permanent.
Unlike the Legacy Fund, which is part of the state constitution and requires voter approval to change, the permanent oil tax fund was only a law. So while the law required a two-thirds majority to remove money from the account, the Legislature needed only a simple majority to repeal that two-thirds requirement.
Keith Kempenich, member of the North Dakota House of Representatives, said some members of the Legislature tried to exploit that loophole in the mid-2000s.
The Legislature decided to put the Legacy Fund in its state constitution to eliminate that loophole. If lawmakers want to change rules for the fund, they'll have to get approval from voters first.
"There are a lot of folks who think we spend too much money the way it is, and if government gets an opportunity, they're going to spend it," said state Sen. Jerry Klein, a Republican.
But even a constitutional amendment hasn't stopped some legislators from attempting to spend the trust fund money before it matures.
Earlier this year, a member of the North Dakota House of Representatives tried to pass a bill that would have allowed $10 million in interest be deposited annually into a college scholarship program, according to The Bismarck Tribune. The legislation eventually was defeated.
Lesson No. 3: Prepare for the future