The Legacy Fund is growing dramatically because of the oil boom. North Dakota’s oil production has risen from seven million barrels a month in 2009 to 24 million. As a result, the Legacy Fund now has over $1 billion in it.
Kessler believes West Virginia should create a similar program. He proposed a bill during the last legislative session that would dedicate 25 percent of the increase in tax revenue from gas and oil production from the effective date of the bill into the West Virginia Future Fund.
Lawmakers would not be able to touch the money for 20 years, and then the money could only be used for “future needs that may arise, including diversification of the state’s economy, tax relief, enhancing education and workforce development and for purposes for which other funding sources are not available.”
The bill failed last session, but Kessler will use the trip to try to generate renewed interest in the idea. He wonders aloud how big a Future Fund West Virginia would have if it had created one from coal taxes years ago.
Kessler’s idea deserves a full debate because there are plenty of pros and cons.
On the positive side, the miracle of compounding interest is an attractive feature because it allows wealth to build. A large fund would become another source of revenue to help pay for the government services people demand.
Stay away from the principal and the fund will be self-sustaining for years.
However, the extra money could also become a political slush fund for lawmakers. Imagine politicians salivating over millions of dollars that could end up funding myriad pork projects, all justified under the broad guidelines of how the money can be used.
Additionally, West Virginia has a number of pressing needs now: Roads and bridges are crumbling. Teachers and public employees want pay raises. Medicaid costs are rising.
It’s not easy to make the argument to save for an addition to the house when the roof is leaking now.
Government can do three things with tax money: Spend it, save it or return it to the people.
It’s certainly not a given that all the tax revenue that collected is justified, since there’s very little analysis about the efficiency of government or the necessity of every service. However, the public does expect certain services that must be paid for.
The question of Kessler’s future fund proposal gets to the heart of the issue of the proper and most effective use of taxpayer dollars. It’s a worthy debate.
Kercheval is host of TalkLine, broadcast by the MetroNews Statewide Radio Network from 10 a.m. to noon Monday through Friday. The show can be heard locally on WCHS 580 AM.