Oil tax revenue provides a financial windfall each year for Alaska residents, and a West Virginia lawmaker thinks natural gas could provide a similar boon for the Mountain State.
President of the West Virginia Senate Jeff Kessler, D-Marshall, has introduced legislation establishing the "West Virginia Future Fund." The plan is based on a system presently in use in Alaska.
Senate Bill 491, if passed, would hold back 25 percent of the severance tax dollars resulting from the production of Marcellus shale in West Virginia, and place the money in an interest-bearing special revenue account. Next, the principal and interest of the Future Fund would be encumbered for 20 years to assure its growth.
"It is anticipated this natural gas boom could be one of the biggest opportunities that has happened in the last 50 years - akin to what has happened with oil in Texas and Alaska," Kessler said.
In Alaska, government officials are required by constitutional amendment to set aside tax dollars generated by oil production into a separate fund that can't easily be touched by lawmakers. Draws from the budget reserve into the general fund require a three-quarters vote of each house of the Legislature and must be repaid.
The Constitutional Budget Reserve was established in Alaska to provide cash to continue services during times of falling oil prices.
And established along with the budget reserve fund was the Alaska Permanent Fund, which provides each eligible resident with a share of the annual oil tax collections. Last year, the fund had a $35.7 billion savings account, and Alaskans each received a payout of $1,281, according to the Alaska Permanent Fund division of the State Department of Revenue.
"This money was set aside so that when the oil was gone, they would have some other means of sustaining their economy," Kessler said. He noted he would like to see such a fund grow to a point from where it contains "hundreds of millions or billions" of dollars from which the state can draw.
"We could use it to provide diversification of the economy, educational opportunities and to increase infrastructure so needed in the state," Kessler noted. "One of the objectives also would be to provide tax relief. In Alaska, there is no income tax, and every man, woman and child gets a rebate for just living there."