Trusting in the Future: The Return of American State Trust Funds in the Shale Era

The expansion of hydraulic fracturing has generated considerable economic growth in many states while also producing a range of negative. For a growing number of states, severance taxes have produced substantial new revenue, with the majority of states blending these funds into general revenue and established governmental programs. However, some states have begun to consider the long-term impacts of fracking and the risks common in energy boom-and-bust economies. This paper will examine the political decision to forego immediate revenue use in favor of long-term investment and development strategies, most notably the case of North Dakota, given its unusually large set-aside of funds (30 percent) and extended planning process for ultimate revenue allocation. The paper will also reviews early experience from new trust funds being created on a smaller scale in West Virginia and Utah, while also reviewing trust fund proposals that are being advanced in other jurisdictions.