Well, it’s a new year here in Louisiana, but not much has changed. A new year means another budget deficit, which means yet another legislative rumpus over who and or what will foot the bill. Last year it was approximately a $940 million budget shortfall. This year it is a $304 million mid-year deficit, and next year’s budget outlook seems to be more of the same. It seems Louisiana is reading off the same script of the 93’ Bill Murray classic Groundhog Day, except our version is a lot less funny.
Over the past two years, the Governor and many, though not all, legislators teamed up to raise over a billion dollars in taxes to fill the budget holes, but however it seems the hole is never fully filled. This year the argument is over the Rainy Day Fund and how much, if any should be used.
After the 1980’s oil bust the state found itself unable to pay for basic services. Some state workers were forced out of their office because the state couldn’t pay the rent, parks were closed and, multiple charity hospitals were forced cut back on their service. In response to these tough financial times, the Rainy Day Fund was set up in 1991. Over the past ten years, the fund has been dipped into on five different occasions, four times by Jindal and once by Governor Edwards, for over $645 millions. During this special session, the Governor proposed to use the maximum allowed amount of one-third of the total amount or $119 million.
If we keep doing the same thing we will keep getting the same results.
I believe Albert Einstein said it best, “Insanity: doing the same thing over and over again and expecting different results.” What will happen when Louisiana runs out of band-aids to fix our budget wounds? It is time for another approach that doesn’t include burdening the people of Louisiana and gives our state the chance to thrive. I think we can do better than this — a thriving oil and gas industry should absolutely be part of the solution.
To encourage future investment in Louisiana, we must first create a stable tax environment. It doesn’t matter whether you are in the dry-cleaning business or a major refiner; when you look to invest, you want a stable tax environment. The latest uptick in taxes combined with the continued attacks on important business incentives makes it easy to find a reason not to invest in Louisiana.
Another way to attract investment is to provide a stable legal environment, particularly important for the oil and gas industry in South Louisiana. Unfortunately, the coastal and Legacy lawsuits have placed a giant red “X” on South Louisiana. We hear it all too often from out of state companies that love the geology and the workforce here in Louisiana, but the threat of getting sued by landowners, parishes, or the state is too high. As the United States experiences an increase in rig counts, South Louisiana continues to have record job losses and historically low rig counts.
The oil and gas industry is a significant economic driver and an enormous contributor to tax revenue in Louisiana. And we face budget deficit after budget deficit; maybe it’s time we focus on revitalizing our oil and gas industry. The industry is contributing $500 million in direct revenue to the state. The question we should be asking is how do we double our energy production, not what hospital should we close. The reawakening of the oil and gas industry is a fundamental component to Louisiana economic revival.
Louisiana is vital to the overall health of the United States and is absolutely essential for the role we play in America’s energy industry. We must prioritize and treat the oil and gas sector for the treasure that it is. Our state leaders must enact policies that will enable our industry to flourish as we look to build a more financially sound Louisiana.