CHARLESTON, W.Va. — The House Finance Committee got a first look at a high-priority bill aimed at kickstarting additional capital investment in West Virginia.
House Speaker Roger Hanshaw has said his top priority is establishing a capital investment fund that would let the state partner with companies or the sovereign funds of other nations.
Hanshaw attended the 5 p.m. House Finance Committee meeting, first observing from a seat in the audience and then testifying before the committee as the person most knowledgeable about the bill.
House Finance Committee members spent a couple of hours Wednesday evening receiving an explanation of the bill and following up with questions.
Among the 11 bipartisan sponsors on House Bill 4001 are House Minority Leader Tim Miley and Delegate Mick Bates, the lead Democrat on House Finance.
Bates has had questions about how the fund would work but said he got on board after receiving about an hour of explanation from the speaker.
“It’s pretty innovative, and would potentially provide opportunity for additional investment in West Virginia,” Bates said prior to Wednesday evening’s meeting. “So I can’t see a downside at this point.”
The bill would establish a Mountaineer Impact Fund, using state financial assets that have been allocated already, so West Virginia could serve as an official partner in investment deals.
Under the newly-established structure, West Virginia could be the top line investor in a variety of projects. The initial draft of the bill described potential projects as valued at no less than $25 million — an amount that was lowered from the originally-envisioned $100 million.
In most cases, as Hanshaw envisions it, West Virginia’s state government would be a minor investor — or perhaps would invest no money at all — but could be the controlling partner, essentially the sponsor of the projects. In other words, West Virginia would be endorsing the investment with the state’s name.
“This does not anticipate putting taxpayer money into investments, but this does not preclude it either, is that correct?” Delegate Jim Butler, R-Mason, asked during Wednesday evening’s Finance meeting.
Guiding those decisions would be a board led by an executive director who would need to be hired. An investment committee including the governor and five appointees confirmed by the Senate would also be established. And the state Commerce Secretary would also be on board.
Big finance companies like Goldman Sachs or Morgan Stanley might line up the capital. An annual audit is expected.
Major investors might include big corporations, combinations of private investors or the sovereign wealth funds of other countries.
“Will we know how the money is being invested?” Butler asked, referring to state officials.
Bates said he’s familiar enough with the concept to be comfortable.
“There appears to be an interest in private money coming in to support private projects through a structure that has the blessing of the state of West Virginia,” Bates said.
“It’s not focused on a particular project. It’s not for a particular company. It’s not for a particular fund. But it puts together a legal framework to allow some pretty big pockets of money to at least be parked in West Virginia for future investment.”
One problem the bill may be aimed at solving is the effect of the federal Committee on Foreign Investments in the United States. CFIUS can intervene in foreign investment deals if it believes they affect national security.
Members include the secretaries of Justice, Homeland Security, Commerce, Defense, State, and Energy, along with the U.S. Trade Representative and the head of the White House’s Office of Science and Technology Policy.
As China has risen as a “strategic competitor,” the concern is that planned investments could be unraveled.
The bill does not specifically reference CFIUS, but the decisions of the board that would be established could address those concerns.
“If the state of West Virginia is the principal holding company, is this a workaround to that committee?” asked Delegate Isaac Sponaugle, D-Pendleton.
West Virginia’s seal of approval as a top line investor could reassure nervous investors, state delegates have suggested.
“Because of our sovereign nature, we can provide a bit of certainty that the federal government isn’t going to come in and unwind the deal,” Bates said. “It’s risk.”