CHARLESTON, W.Va. -- West Virginia should begin setting aside a portion of coal and natural gas severance taxes to create a trust fund that could help pay for long-term programs for economic development, education and infrastructure improvement, a progressive policy research group said in a report released Tuesday.
The West Virginia Center on Budget and Policy urged lawmakers to impose an additional 1 percent severance tax for the project, which could raise $5.8 billion in revenue over the next quarter-century.
Report co-author Ted Boettner, executive director of the center, said the proposed "Economic Diversification Trust Fund" would be an investment in protecting the state from volatile energy markets and preparing for the day when West Virginia's mineral resources are played out.
"The only feasible way to ensure that we will always benefit from our rich natural resources is to create a permanent trust fund," Boettner said. "A permanent trust fund should also be used to diversify our economy through strategic investing in early childhood development, workforce training, infrastructure and research and development."
The center's 41-page report outlines existing extractive industry trust funds in other states, including Alaska's well-known "permanent fund" and similar programs in Montana, New Mexico, North Dakota, Utah and Wyoming.
"While each is managed and invested in its own unique way, the concept is the same -- to provide a source of sustainable funding for state budgets that will be available even after the taxable resource is depleted," the center said in a press release. "A permanent trust fund sets aside severance tax revenue so that it does not go into a state's general revenue fund and can be saved and invested for the future."
If West Virginia had created such a program in 1980, it could have provided the state with $43 million each year and still had a balance of nearly $2 billion at the end of 2010, the center said.