E-DAY in Charleston The 23rd annual E-Day, organized by the West Virginia Environmental Council (WVEC), brought together 25 environmental groups and sustainable businesses at the Capitol on Wednesday of this week. The theme for this E-Day was “One WV – Justice for All”. You can read further about this successful event in Denise Poole’s report on the WVEC website.
FUTURE FUND GETS BOOST Wyoming Governor Mike Sullivan delivered a talk to lawmakers on Tuesday. He described the success of Wyoming’s Permanent Mineral Trust Fund, a state fund built upon severance taxes on extracted resources. In July 2011, the farsighted West Virginia Center on Budget and Policy recommended that West Virginia adopt this strategy for providing for investment in economic diversification after the shale boom and bust cycle has played out (see this earlier post). The idea was further described in the recently released report by the Center entitled Creating an Economic Diversification Fund. WV currently has a 5% severance tax. The Center endorsed a 1 percent increase in the severance tax on coal and natural gas which, if implemented, would generate a projected $5.8 billion in revenue over the next quarter century.
On Feb. 5th, the Charleston Gazette resoundingly supported the recommendation of the Center in an editorial. Following are snippets from that column, Minerals:create a nest egg.
Alaska, Montana, Wyoming, New Mexico, North Dakota and Utah have had severance tax trust funds since the early 1970s, says Ted Boettner, executive director of the Center on Budget and Policy and one of the authors of the report….
It is amazing that West Virginia has not created such a fund already.
This state needs more economic development, and has an underdeveloped workforce and an aging population. It also has high rates of disability and disease and a small tax base — the fewest number of taxpayers making more than $200,000 a year in America.
If the Marcellus gas boom proves to be as great as everyone hopes, then a fraction of that wealth should flow to the people of West Virginia. As West Virginians know from long experience, booms may be followed by busts. How much smarter to learn from the past and devise a method to smooth out the roughest swings in that inevitable cycle.
However, WV Governor Earl Ray Tomblin has gone on record as being unsupportive of an increase in the severance tax. Ken Ward, who has been closely following this issue, reported in the Feb. 2nd Gazette:
“Right now, I think that our severance tax is sufficient,” the governor said in a brief interview after a speech to the West Virginia Coal Association’s annual mining symposium in Charleston.
Senate President Jeff Kessler (D-Marshall) has introduced a bill to institute a Future Fund similar to Wyoming’s fund and funded by severance taxes on natural gas, but it relies upon directing a portion of current severance taxes to a fund without raising the severance tax rate as the Center has recommended in it’s report.
Here’s Ken Ward’s story on Feb. 7 regarding the Wyoming governor’s visit. Also worth reading is Ward’s Jan. 31 commentary on the Center’s proposal for a mineral trust fund in The Coal Tattoo blog. That post is entitled Will W. Va. prepare for a post-coal future?
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The main thrust of the article above is to extole the virtues of a trust fund to save a portion of WV severance tax revenue for future use by the state. I agree with that idea, but disagree with the further thrust of the article, that a severance tax increase is needed to fund it.
Most of us save from what we now make. Nobody I know of argues that their personal savings depended upon increased income.
Furthermore, the article assumes that great good comes from increased taxation and ignores the benefits the natural gas industry has brought to us by private enterprise.
Natural gas is plentiful (The US is a net energy exporter for the first time in decades), natural gas prices are much lower than petroleum-based energy, and going lower.
Folks who heat their homes and businesses with natural gas would rather see lower energy prices AND lower taxes, I think.