Will W.Va. prepare for a post-coal future?

January 31, 2012 by Ken Ward Jr.

Gazette photo by Chip Ellis

We’ve written before about the proposal from the good folks at the West Virginia Center for Budget and Policy for a long-term trust fund to prepare our state for the day the coal and natural gas run out … well, today, the center has a new report out that discusses this notion in much more detail. They conclude:

West Virginia would benefit greatly from the creation of a permanent severance tax trust fund. An Economic Diversification Fund would help the state meet many of today’s economic challenges, while ensuring that future generations benefit from the mineral wealth of their state. In the past, West Virginia did not gain broadly shared prosperity for its residents, despite the tremendous wealth of natural resources in the state. As the Marcellus Shale gas play begins to boom in West Virginia, the state should take action today to ensure that it truly benefits from the extraction of its valuable natural resources. Without a permanent fund, the economic benefit from the natural resource extraction will decline along with the natural resources themselves.

The center proposes a 1 percent additional severance tax on coal and natural gas that could go into this fund, and be used a bit at a time to help pay for a variety of economic development efforts — everything from early childhood development programs and college grants to workforce training and infrastructure improvements.

Authors Ted Boettner, Jill Kriesky, Rory McIlmoil and Elizabeth Paulhus helpfully provide an overview of similar programs in other states — Alaska, Montana, New Mexico, North Dakota, Utah and Wyoming — that tax the extraction of non-renewable resources to pump money into state development efforts and put funds aside for future use.

According to the report, if West Virginia had created such a program in 1980, the state would now have a trust fund with assets of nearly $1.9 billion — that’s BILLION, with a B.  If started now, the fund would have generate revenues of $5.8 billion by 2035.  The report says:

If West Virginia wants future generations to benefit from the extraction of its natural resources, it must set aside a portion of the severance tax revenue from all natural resources to invest in important public structures that will build a stronger, more vibrant future for the state. To accomplish this task, West Virginia could follow the lead of six other energy states by creating a permanent severance tax trust fund (hereafter referred to as a permanent fund) that converts non-renewable natural resources into a source of sustainable wealth that serves the state today and in the future through targeted investing. Even after the state’s natural resources are depleted, West Virginia could use income from the fund to diversify the economy, make much-needed investments in infrastructure and human capital, lower future tax burdens, and deal with costs associated with past and future mineral extraction.

4 Responses to “Will W.Va. prepare for a post-coal future?”

  1. William says:

    If the EPA don’t give us permits they won’t be no flat land build anything in the southern part of the state. Arch want to mine 20 million tons of coal can’t get a permit and now they to mine buffalo mountian that’s 16 million tons that won’t get mine so how much more money would wv have and the flat land to do something with

  2. BOUTTIME says:

    NO this state wiil not prepare for beyond COAL as long as we continue to have the same pro coal mind set of government. Companies such as Arch Coal , that William just mentioned, could try mining methods other than MTR, like deep mines – seems to work for them in other areas of WV. Maybe they just like to do controversial things or maybe they just want some more selenium pollution to treat. These guys just never seem to learn & move off dead center.

  3. william says:

    you can’t deep mine the area where arch wants to mine the coal seam is to high up on the mountain before you can deep mine the mountain has to be wide enough

  4. Walt Auvil says:

    Again and again the unanswered question looms . . . what is plan B after the coal is gone? This blog asks the question . . . few of our WV political leaders have any interest in addressing that issue. The new promised land (fracking ouselves) is no answer.

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