Permanent Wyoming Mineral Trust Fund (PWMTF) Definition

What Is the Permanent Wyoming Mineral Trust Fund (PWMTF)?

The Permanent Wyoming Mineral Trust Fund (PWMTF) is an investment fund owned and managed by the state of Wyoming. The fund was established in 1975 and is the oldest and largest government fund in the state. It is used to help run the state. Funded with severance taxes on natural resources within the state, the PWMTF invests in stocks and bonds. Only the fund's earnings—not the principal balance—can be spent. The Permanent Wyoming Mineral Trust Fund had almost $10 billion in assets as of the end of March 2022.

Key Takeaways

  • The Permanent Wyoming Mineral Trust Fund is an investment fund owned and managed by the state of Wyoming.
  • The PWMTF is the state's biggest sovereign wealth fund, with a market value of under $10 billion.
  • It is funded largely by severance taxes on minerals and other natural revenues.
  • The PWMTF acts as an endowment for Wyoming and covers the costs of running the state.
  • Although it invests in both bonds and stocks, only earnings from capital gains, interest income, and dividends can actually be spent.

Understanding the Permanent Wyoming Mineral Trust Fund (PWMTF)

The Permanent Wyoming Mineral Trust Fund is a type of permanent fund called a sovereign wealth fund (SWF). SWFs are typical government funding tools. They consist of investments and assets that the government is not allowed to cash out or deplete. While it can't touch the principal, the government normally has the right to spend any revenue these investments generate on appropriate functions and expenses.

The PWMTF is one of nine non-pension funds managed by the State Treasurer's Office. It covers part of the costs of running Wyoming and acts as an endowment for the state and cushions the impact of the state's economic cycles. As Wyoming is richly endowed with natural resources, its economy depends on commodity prices and is prone to boom and bust cycles. By conserving its wealth, the PWMTF ensures future generations share in the gains generated by these finite resources.

As of March 31, 2022, the market value of the PWMTF was about $9.7 billion. 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 largest mineral severance tax contributors to the PWMTF since its inception have been natural gas, coal, and crude oil.

The fund has a 5% spending policy, which means that the maximum amount available to the state legislature to spend is 5% of a five-year average of the fund’s market value. However, only income, dividends, and capital gains can be spent.

39.5%

The percentage of the total market value of Wyoming's investment portfolio that the PWMTF represents. In other words, more than one-third of the state's wealth is generated by the Permanent Wyoming Mineral Trust Fund.

Special Considerations

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 earned a positive return in every fiscal year of its existence. Through the fiscal year 2015, the PWMTF generated $4.5 billion in interest income for the state’s general fund. For the decade between 2010 and 2020, the PWMTF returned 7.15%.

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 Wyoming State 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 shortage.

History of the Permanent Wyoming Mineral Trust Fund (PWMTF)

The origin of the Permanent Wyoming Mineral Trust Fund dates back to 1968 when then-Gov. Stan Hathaway introduced a bill in the state legislature to institute a severance tax on minerals in the state. Hathaway took this action after the balance in the state’s bank account had fallen to about $80. The bill passed in the 1969 legislative session, establishing a 1% severance tax.

Wyoming legislators sought to raise the tax in 1974 but Hathaway vowed to veto the increase unless part of the tax revenue was set aside in a permanent mineral trust fund, paving the way for the passage of the PWMTF. It was officially created by an amendment to the state constitution in November 1974.

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 that were deposited in the PWMTF.

The PWMTF originally only invested in bonds. At the time, the fixed-income requirement was enshrined in the state constitution. However, in 1996, Wyoming voters approved an amendment to allow the fund to invest in stocks as well. Up to 70% of the PWMTF may be invested in equities.

Permanent Wyoming Mineral Trust Fund (PWMTF) vs. Other Funds

As noted above, the PWMTF is one of nine non-pension investable funds that are managed by the state. The following are the other funds along with their market values and the total percentage of market value as of March 31, 2022:

  • Permanent Land Funds: This fund is funded with royalties, leases, fees, permits, and other revenue from state lands. The market value was about $4.9 billion, which made up 20.2% of the state's portfolio. The state can invest in equities by as much as 70%.
  • Hathaway Scholarship Endowment Fund: This fund's market value was about $0.69 billion, which represents 2.9% of the state's portfolio. It is funded by federal mineral royalties. As much as 70% of the fund can be invested in equities. Income is used to pay for post-secondary tuition for qualifying students.
  • Excellence in Higher Education Endowment Fund: Also funded with federal mineral royalties, income from this fund is used to recruit and retain post-secondary faculty. As much as 70% of the fund can be invested in equities. Its market value represented 0.6% of the total portfolio at $0.14 billion.
  • Workers Compensation Fund: With a market value of over $2.5 billion (10.3% of the portfolio), this is funded with employer premiums. Roughly 45% of the fund can be invested in equities. Interest income goes to claims and other related payments.
  • LSRA: With a market value of about $1.24 billion or 5.1% of the state's portfolio, the LSRA is funded by Wyoming's legislative stabilization reserve account.
  • Pool A: The market value of $0.27 billion represents 1.1% of the state's portfolio. It is a combination of funds and trusts that are found within the state, including Wyoming Public Television.
  • State Agency Pool: This fund represents 20.5% of the state's portfolio of over $5 billion. The fund uses money that is pooled from all other state funds. The income is divided up between certain state agencies or state general funds. This included state COVID-19 relief funds.

The total of all nine funds, including the Permanent Wyoming Mineral Trust Fund was about $24.5 billion.

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  1. Wyoming State Treasurer. "WYOMING STATE INVESTMENT PORTFOLIO," Page 1.

  2. Wyoming Taxpayers Association. "The Permanent Wyoming Mineral Trust Fund Facts & FAQs," Pages 2 and 4.

  3. WyoFile. "Wyoming’s Investments: Barriers to Growth."