WHEELING - The way Senate President Jeff Kessler sees it, the natural gas boom has brought West Virginia to a crucial fork in the road - and it cant afford to choose wrong this time.
One fork is the road chosen by past generations of state leaders when the coal industry was at its apex: Spending severance tax revenue as it came in, with no vision for the state's future needs, a policy Kessler believes is the reason why the state's most coal-rich counties are among its most cash-poor today.
The other road - the one Kessler, D-Marshall, has been urging his colleagues to choose for three years now - would require the state to look out for future generations by investing a portion of natural gas severance tax revenue, much the same way other states such as North Dakota and Alaska have done with oil.
After three failed tries, Kessler's legislation creating the West Virginia Future Fund passed the state Senate earlier this month, and he believes its prospects are good to clear the House of Delegates.
"We're on course to change the course of our state. This can redefine our future, and that's what it's all about. We're keeping our fingers crossed,"Kessler said recently after learning his bill had passed out of committee.
The bill requires that the first $175 million in natural gas severance tax revenue the state receives would continue to be distributed as normal between the general fund and producing counties. Twenty-five percent of any revenue beyond that amount would be deposited in the Future Fund.
The fund's principal balance never could be touched, and lawmakers would be required to wait until 2020 to begin spending any of the accumulated interest. Even then, the money only could be spent for economic development projects, infrastructure improvements or education enhancement.
Kessler is hoping to solidify those limitations and prevent future lawmakers from removing them by writing them into the state constitution. A proposal to place such an amendment before voters remains pending in the Legislature.
According to Kessler, had West Virginia created a similar mineral trust fund in 1970, when coal was still king, its principal balance today would be almost $8 billion. Assuming 10 percent interest, that would provide the state an $800 million annual windfall that would allow it to modernize its roads and bridges, offer tax relief to encourage business growth and pay its teachers a more competitive wage.
"History need not be destiny," Kessler wrote in a message to his legislative colleagues upon introducing the legislation. "But without a plan for the future, we are likely to continue to experience a lack of economic diversity, cycles of booms and busts, and poor economic and social outcomes."
Some lawmakers have expressed reservations about creating a Future Fund at a time when the state is having trouble balancing its budget on a year-to-year basis. But Kessler said the $175 million benchmark for collections means the state likely wouldn't put a significant amount into the fund for two years - at which time he hopes the states finances will be more sound.
According to Gov. Earl Ray Tomblin's six-year budget forecast, oil and gas severance tax collections are expected to reach $147 million by the end of the current fiscal year on June 30 - more than double last year's collections - and $176 million for the 2014-15 budget year.
With natural gas companies investing billions in drilling and related infrastructure and processing plants around the state - particularly in his home county - Kessler believes those forecasts are conservative.