What Is the Permanent Wyoming Mineral Trust Fund?
The Permanent Wyoming Mineral Trust Fund (PWMTF) is the state's oldest and largest permanent fund, with assets of $8.1 billion as of April 30, 2018. The Wyoming Legislature established the fund in 1974. It is funded by a portion of severance taxes on mineral revenues and occasional direct legislative appropriations, while income from the fund goes to the state general fund. The fund covers part of the costs of running the state, and acts like an endowment for the state by conserving its wealth for future generations.
Understanding the Permanent Wyoming Mineral Trust Fund
The Permanent Wyoming Mineral Trust Fund (PWMTF) cushions the impact of the state's economic cycles. As Wyoming is richly endowed with natural resources, its economy depends on resource prices and hence is prone to boom and bust cycles. The PWMTF ensures future generations share in the wealth generated by these finite resources. The largest mineral severance tax contributors to the PWMTF since its inception have been natural gas, coal, and crude oil.
The value of the PWMTF increased steadily from its inception, earning double-digit annual returns for its first 11 fiscal years through 1986. The fund eclipsed $1 billion in assets in 1989 and has earned a positive return in every fiscal year of its existence. Through fiscal year 2015, the PWMTF had generated $4.5 billion in interest income for the state’s general fund.
The history of the PWMTF dates back to 1968, when Wyoming Governor Stan Hathaway introduced a bill in the Legislature to institute a severance tax on minerals in the state. The bill passed in the 1969 legislative session, establishing a 1% severance tax. Hathaway took this action after the balance in the state’s bank account had fallen to about $80. Wyoming legislators sought to raise the tax in 1974 but Hathaway vowed to veto the increase unless part of the tax revenues were set aside in a permanent mineral trust fund, paving the way for passage of the PWMTF.
For its first 13 years, 2% of severance tax revenues were used to grow the account. Later, the requirement was lowered to 1.5%, and 0.5% was diverted into the state’s savings account. In 2005, an additional statutory 1% was added to the constitutional requirement, bringing the total to 2.5% of severance taxes which were deposited in the PWMTF.
Example of the PWMTF in Action
In 2016, a sharp decline in coal production combined with low oil and natural gas prices led to a revenue shortfall for the state. The Legislature, during the 2016 budget session, provided for a diversion of the 1% statutory severance tax from the PWMTF to the general fund to address the shortfall.