State should remember it needs oil industry

The Louisiana Legislature adjourned 6 p.m. March 9. Unfortunately, most of the heavy lifting began within 15 minutes of the deadline. After the dust was settled, taxes were raised by around $850 million dollars. This encompasses a number of changes in the treatment of LLC’s and NOL’s, reductions in tax credits, changes in the corporate income tax rate, and additional business utilities burden, and additional taxes on the sale of manufacturing, machinery, and equipment, among others.

We were prepared to contribute in a thoughtful way to helping the state dig out of this budget shortfall. Unfortunately, that never happened. Instead, we are now left trying to make sense of how to absorb this blow during the biggest downturn in the oil and gas industry in my lifetime. This could not happen at a worse time.

Equally as troubling is the distorted rhetoric I heard inside the Capitol. There were cries that businesses were not paying enough of taxes which, simply put, is false. Legislators were being presented with a false choice that pitted business against the funding needs of health care and higher education. I had the opportunity to respond at the Senate Revenue and Fiscal Affairs Committee hearing last week.

I pointed out that last year’s budget was paid on the back of business — to the tune of $600 million. I also reiterated that from 2006-2013, the oil and gas industry paid $1.4 billion in taxes annually. This adds up to roughly $11.2 billion in taxes paid over 8 years. Our industry pays for 14 percent of the state’s budget.

The true irony in this is that low oil prices are often blamed for the deficit. For every dollar drop in a barrel of oil, the state loses roughly $12 million dollars. So at a time when the state should be doing everything in its power to encourage oil and gas activity, they have opted to raise the taxes on the very economic engine that, in years past, have funded as much as 90 percent of the state budget.

Like I have said before, the state needs the oil and gas industry as much as the oil and gas industry needs the state. I just wish the state would remember that.

— Chris John, president of the Louisiana Mid-Continent Oil and Gas Association