State eyes Legacy Fund from gas revenue

A group of West Virginia legislators will travel to North Dakota soon to learn more about a state Legacy Fund there — a 2-year-old trust fund created with oil and natural gas tax revenue that already contains more than $1 billion in assets. State officials there can’t touch that money until 2017 when interest generated from the account will start flowing into the state’s general revenue fund.

Senate President Jeff Kessler, D-Marshall, wants to start a similar fund here in West Virginia, using tax revenues from natural gas production in the state. He hopes the delegation can learn not only how successful the Legacy Fund has been there but also consider the problems that state experienced during the first two years of its existence.

The first problem was that voters in North Dakota rejected a proposed constitutional amendment in a statewide election in 2008, with nearly two of every three voters rejecting the idea. It would have directed 50 percent of the state’s tax revenues from all oil and natural gas production to the new Legacy Fund.

But when lawmakers there went back to the drawing board and suggested only 30 percent of these tax revenues be diverted to the new Legacy Fund, nearly two of every three voters endorsed the idea.

Originally, the North Dakota Legislature established a “permanent oil tax fund.” It had the same basic goal as the current Legacy Fund, but because it was only a state law — unlike the Legacy Fund, which was created as an amendment to the state’s constitution—a simple majority vote of the Legislature could remove money from the account.

So the legislative leaders of the movement decided to make the creation of the Legacy Fund plan a part of the state constitution. Voters ratified that idea in 2010, so now the Legislature would need voter approval before any of the money can be spent.

This still didn’t stop some legislators there earlier this year from trying to pass a bill to take $10 million in interest earned in the Legacy Fund to be used for a college scholarship program. But the proposal was eventually defeated.

Kessler has been getting a lot of phone calls from members of both the House of Delegates and state Senate from both political parties, who would like to be chosen for the trip to North Dakota. Those chosen and when the trip will occur are expected to be announced soon, according to Kessler spokeswoman Lynette Maselli.

West Virginia collected $74.7 million in natural gas severance taxes last fiscal year, a slight increase from the $68.8 million that was received in the 2012 fiscal year. Coal severance taxes, meanwhile, dropped $73.4 million between the 2012 and 2013 fiscal years from $460 million to $386.6 million.

Kessler has tried to set up a natural gas “Future Fund” during each of the last few regular legislative sessions. This year’s proposal would have set a baseline of natural gas excess tax revenue and then funneled 25 percent of any additional money into a trust fund. The bill died in the Senate Finance Committee.

Meanwhile, many of the pensions paid to individuals who have worked in state or local government and are now retired are in the six-figure range, according to recent newspaper reports. And the largest individual pensions are in the Teachers’ Retirement System. Olen (J.P.) Jones, a former Marshall University provost and president of the West Virginia School of Osteopathic Medicine, has a pension of $169,674 a year.

Former Braxton County Superintendent Kenna Seal, who has also served as head of the state Office of Education Performance Audits, gets $116,955 per year from the same pension plan and former state superintendent of schools Jorea Marple — fired last year — has an annual pension $107,062 a year. Her predecessor as state superintendent, Steve Paine, has a $101,063 annual retirement pension.

Some judges have six-figure pensions as well. Prior to 2005, state law required that retiring judges were to receive 75 percent of their current salary.

So former justices of the State Supreme Court of Appeals Elliott Maynard, Thomas McHugh, Richard Neely, George Scott and Larry Starcher each receive $102,000 annually in their retirement, according to a recent newspaper report.

Altogether, there are more than two dozen retired state employees who draw pensions in excess of $100,000 a year, and there are 79 more who receive an annual pension of more than $80,000 a year.

No wonder the state had to allocate about 12 percent of last year’s general revenue fund budget on retirement benefit plans for teachers and public employees alone.

Finally, the governor’s special blue ribbon panel that is conducting a series of nine regional meetings around the state to gauge public opinion about potential tax increases to help pay for much-needed repairs and improvements of West Virginia’s existing highway system began its tour in the Eastern Panhandle at Kearneysville on July 11.

Members found at least one Eastern Panhandle lawmaker who recommended cautious consideration of higher taxes.

Delegate Larry Kump, R-Berkeley, said it was “troubling that one of the first agenda issues . . . is a smorgasbord menu of ways for more taxing and spending.”

He pointed out that West Virginia is still one of the few states that assumes responsibility for county roads and bridges.

And he also noted that despite neighboring Maryland’s recent boost in its gas tax, West Virginia’s per gallon tax is the highest in the region. And he pointed out that many residents in the Eastern Panhandle — so close to neighboring Maryland, Virginia and even Pennsylvania — have out-of-state license plates on their cars when they drop off their children at school.


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