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02 15, 2016 by Chris John | The Daily Advertiser
We have all seen press coverage of the budget scenario in which Gov. John Bel Edwards finds himself in today.
According to the Revenue Estimating Conference, state government will have to locate around $850 million to pay their bills over the next five months. Additionally, the new fiscal year begins on July 1. Current forecasts indicate a need for upwards of $2 billion to cover costs over that fiscal year. There will be a special session beginning Feb. 14 to address the short term fiscal issues that will run into the regular session that begins on March 14.
This news has many people questioning how this will be addressed. Options abound as to how this can be solved. Edwards has released a “call” that includes a bevy of proposals that would ultimately result in increased taxes on businesses and individuals. And, as always, there is the ongoing debate about if the focus should be on the spending or revenue side of the ledger.
Unfortunately, the oil and gas industry is all too familiar with budget issues. With the price of oil hovering around $30 a barrel and natural gas pricing continuing to remain depressed, our industry has had to make some really difficult decisions. Layoffs have been a constant fear for industry employees, while drilling activity continues to reach historic lows. Due to these conditions, those feared layoffs have become a reality and capital expenditure allocations are next to nothing. Economist Loren Scott recently noted that 9,000 folks have been laid off on the corridor between Lafayette and Houma. And that is only a portion of what is going on around the state.
The oil and gas industry is lucky to be one of the biggest economic engines of the state. As recently as 2014, the industry provided 300,000 jobs to Louisianans and contributed over $73 billion in economic impact. Those numbers are obviously down significantly in our current economic environment. The idea that taxing the industry will have little impact to companies’ decisions to do business in Louisiana is a complete falsehood. In these rough times, industries need a stable, predictable regime that will foster a comeback. A comeback from a situation that one member company recently told me has been worse than the 1980s.
The oil and gas industry and Louisiana’s partnership represent the bedrock of Louisiana’s economy. In times where both industry and the state are struggling, we need each other now more than ever. Any unnecessary, onerous, or targeted actions towards the industry will ultimately end up hurting all parties.
We have more than 100 years of history with Louisiana. Let’s not kick each other while we are down. Neither of us can afford that.
— Chris John, former congressman, is president of the Louisiana Mid-Continent Oil & Gas Association.
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