Is it really a “Future Fund” if there’s no funding in it?
That was a question Gazette-Mail reporter Ken Ward Jr. asked Ted Boettner, executive director of the West Virginia Center on Budget & Policy, earlier this week on our Mountain State Morning podcast.
Boettner’s agency had pushed for the idea, which was signed into law in 2014 by then-Gov. Earl Ray Tomblin, as a way of protecting the Mountain State from the “boom and bust” nature of extraction industries. Boettner and many others don’t want to see the state suffer from the eventual bottoming out of the natural gas industry, whenever that might occur, the way it has suffered since the coal industry has declined.
The Future Fund would take 3 percent of all tax revenue from oil, natural gas, mineral and timber industries to finance things like infrastructure improvements or even pay raises for teachers. The bill’s main sponsor at the time, then-Democratic Sen. Jeff Kessler, touted it as a way to break the cycle of poverty in the state.
Unfortunately, as Boettner pointed out, there were all kinds of conditions placed in the bill that have to be met before any Future Fund money gets collected. The balance in the state’s Rainy Day Fund has to exceed 13 percent of the general fund in the state budget. The budget also has to be balanced without the use of the Rainy Day Fund and the money can’t be collected if any mid-year hiring freezes have been implemented.
It’s that first condition that really hamstrings getting money for the Future Fund, Boettner said, adding that it would take multiple years of budget surpluses to really reach the point where the Future Fund would collect the money it should.
By that time, “This could all be over,” Boettner said, referring to the success of the natural gas industry.
One simple solution would be to increase the severance tax on natural gas. It’s not as if the state is seeing tremendous growth from the industry. Most of the job growth is in pipeline construction, and it’s questionable how many in-state jobs — which will go away sooner than people might think — that aspect of it is actually creating.
Other industry that was supposed to accompany natural gas extraction, like a cracker plant or increased chemical manufacturing, has not materialized. Talk of a petrochemical storage hub continues, but it’s anyone’s guess as to if that will actually happen, while plenty of West Virginians wonder if the state should even want such a project with the health, safety and environmental risks it would bring.
Still, as Boettner pointed out and as has been demonstrated with regularity, there isn’t much interest, at least politically, in seeking higher severance taxes. The industry lobby is strong and conservative political leaders have argued that an increase in taxes will push the natural gas industry out of the state.
But the resources are here in West Virginia, and the state should benefit from out-of-state companies extracting the stuff. If the government continues to stall on getting fair compensation, this will play out exactly as it did with coal, and West Virginia will once again be left with ravaged land, fewer resources and poorer health, with nothing in place to show for it.