The Register-Herald, Beckley, West Virginia

July 8, 2013

Senate leader battling for future fund

By Mannix Porterfield
Register-Herald Reporter

CHARLESTON — Decades ago, out-of-state coal barons dug beneath West Virginia and hauled the profits back to the brick-and-glass world of corporate America, leaving little behind for the state.

Now, in the 21st century, the state is witnessing a new energy boom — oil and gas — and Senate President Jeffrey Kessler doesn’t want West Virginia to get dry docked again when the boats go upstream.

In mind is the proposed West Virginia Future Fund, one that would be devised with a token of the severance taxes now paid by the oil and gas industry for use in developing new industry, improving education, expanding broadband, even building and repairing highways.

“We’ve been living now through this bust-and-boom cycle of energy markets for so long, it’s time for us to start having some long-term stability in our state,” the Senate leader says.

“We have an opportunity now, particularly with the energy markets with oil and gas, to really change the course of our state forever.”

Kessler, D-Marshall, has been pursuing the idea of a fund the past few sessions, but SB167 failed to reach the Senate floor for a vote.

Moving to give lawmakers a view of how such a fund operates, he is assembling an entourage to examine the North Dakota Legacy Fund later this summer.

In that state, a fund with a different name has amassed $1.3 billion in just four years.

By contrast, Kessler said it took the state two decades to assemble a Rainy Day Fund, created to deal with floods, snowstorms and the like.

Not long ago, an executive of a Norwegian firm visited Kessler and spoke highly of his proposed Future Fund.

“He called it an excellent idea,” Kessler recalled.

The executive said to Kessler, “We’re the richest country now in Europe. We’ve got over $640 billion.”

And that, Kessler emphasized, was indeed billion, not million.

“Can you imagine that?” he said, speaking via cell phone from Disney World during a Fourth of July week vacation.

“Our general revenue budget is $4 billion. They’ve got about 150 times that sitting in a reserve fund.”

For now, Kessler and others are looking at the oil and gas industry, owing to “such an enormous explosion and activity in that area, and it’s only going to continue.”

“Billions of dollars are being invested into this resource in our state,” the Senate president said.

“My brother is the assessor of Marshall County. He’ll tell you that in the last three to four years the value of commercial property has quadrupled in our state. That’s overwhelmingly due to the level of plants that are oil and gas related. And it’s probably going to quadruple over the next decade.”

Kessler sees no letup to the industries, particularly with Marcellus shale.

“We’re just at the tip of the iceberg on this,” he said.

“At some point, we need to take a long-term view of where we want to be 20, 30, 40 years from now. Coal has been important to our state. Coal has been king. Quite frankly, a lot of the counties that produced most coal, in many respects, are the most distressed and poorest in the state. Look at the McDowells, the Mingos, the counties that were really producing coal. Little was left behind when the seams got tapped out.”

Which is why Kessler says he doesn’t want West Virginia to repeat the same mistake with the oil and gas industries.

His degree in economics keeps telling him one thing — all about the law of supply and demand.

“We have what the rest of the world craves and needs,” the Senate president said.

“There’s absolutely no reason to give it away. There’s no reason not to make sure we don’t tap into the extraction of that resource and provide for long-term prosperity and wealth.”

Kessler emphasized he isn’t considering a special tax, and, in fact, says none is necessary, given the exponential growth in gas severance, one he envisions as 10-fold. And for that reason, he feels the state needs to devote a portion of it to the proposed Future Fund.

“I’m not saying take it all,” he said.

“The pie’s going to grow in size, from a dime to a silver dollar. I’m not saying take the whole extra 90 cents. Take a portion of it, 20 percent, or 25 percent, of additional revenue. We’re making only $60 million now. Then it becomes $600 million. Take $100 million a year and set it aside. You do that over the course of time, and the next thing you know, you’ve got real money.”

Kessler says he doesn’t want this generation of lawmakers to be shortsighted, as those were in the past.

“Had we put a few pennies of every ton of coal that came out of the earth in West Virginia 50 years ago, we’d be the richest state in the country right now,” he said.

“And I don’t want to see that opportunity come and go again, because we didn’t have the good foresight, the courage, and the wisdom to realize that resources are finite, and when they’re gone, they’re gone. If you think somebody is going to come in and say, ‘We’re not going to come after your oil because it costs a extra few cents a barrel,’ I think you’re crazy. They’ll still do it.”

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