Ive argued that the oldest sovereign fund in the world is...American. Ive also argued that the country with the most sovereign funds in the world is...America. And Ive scolded myself for overlooking these facts when doing broader analytic treatments of SWFs internationally. Well, I plan to no longer make that mistake again! And, as such, I plan to read two new policy briefs that make a case for new sovereign funds in West Virginia and Kentucky this weekend:
The first one was prepared by the West Virginia Center on Budget and Policy and is entitled Creating an Economic Diversification Trust Fund: Turning Nonrenewable Natural Resources into Sustainable Wealth for West Virginia. Heres a blurb:
For more than a century, West Virginias tremendous natural resource wealth has been extracted. The state has been a center of coal mining in the United States, producing approximately 13.4 billion tons of coal between 1880 and 2009. In recent times, technological advances have made it possible for companies to access the expansive Marcellus Shale gas reservoir, which lies under much of West Virginia... Due to the nonrenewable nature of these resources, the industries and revenue attached to them only last as long as the resources remain. Furthermore, this wealth of natural resources historically has not brought long-term prosperity to the state... 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.
The second policy brief was prepared by The Mountain Association for Community Economic Development and the Kentucky Center for Economic Policy and is entitled Promoting Long-Term Investment in Appalachian Kentucky: A Permanent Coal Severance Tax Fund. Heres a blurb:
Debate in the legislature about shifting some eastern Kentucky coal severance tax dollars to higher education raises key questions about how to build a future for Appalachian Kentucky. What strategies and investments make the most sense to diversify and improve the regions economy? How should citizens and leaders in the region go about identifying priorities? And how long can we expect the coal severance tax to be a substantial resource for investment? Recent trends and official projections about the decline of coal production in Central Appalachia heighten the need for a public conversation on these questions. That conversation should include consideration of a permanent severance tax fund, as other natural resource-dependent states have created, as a piece of an overall plan to address the regions long-term economic challenges.
Have a nice weekend!