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Monday, October 20, 2014

TX uses fracking income to create public trust fund. Why not PA?

A Texas fund that collects rents and royalties from oil and natural gas development has built the largest education endowment in the country.

StateImpactPA reports that:

The publicly run endowment, called the Permanent School Fund, is worth $37.7 billion dollars. That’s $1.3 billion more than Harvard University’s $36.4 billion endowment. Jim Suydam, a spokesperson for the Texas General Land Office, says a big part of the story is the shale gas boom...
The Permanent School Fund dates back to the 1800′s, to the time when Texas was an independent public and had more land than cash. So lawmakers tied government lands to a special fund that helps build and maintain public schools. In essence, the state fund is a giant landowner that leases its surface and mineral rights to private companies, and charges a 25 percent royalty on the oil and gas. The Permanent School Fund also leases land to cattle ranchers and sells water rights.
A long-overdue severance tax on natural gas production in Pennsylvania could fund something similar for education and other needed investments. But I've proposed the creation of an analogous - but specialized - conservation trust fund for PennsylvaniaThe conservation trust fund would be created from royalty income from existing state forest natural gas leasing - income that's currently being squandered - over $225 million this fiscal year alone - on stopgap budget fixes. 

The state forest is being damaged by natural gas development.  The first use of state income resulting from that development should be to mitigate that damage and conserve the public's forest - something our state's constitution requires.  Investing income drawn from the public's lands in a public trust fund could also fund urgently needed investments in state parks and forests and statewide conservation - and, properly managed - endow those same powerful economic engines long after the gas ceases to flow.

If Texas can resist the urge to spend every nickle as soon as it comes into the state treasury, and instead take the fiscally conservative course of thinking about the future and investing in it, so can Pennsylvania.

Will we?

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