Area’s legislators talk gas prices
Area’s legislators talk gas prices
Oil revenue makes up 12 percent of state budget
Falling oil prices make up about $200 million of Louisiana’s projected $1.6 billion budget shortfall, the Revenue Estimating Conference announced last month.

While Southwest Louisiana lawmakers said they will face a big challenge to reach a balanced budget once the session begins April 13, the good news is that the state budget doesn’t rely as much on oil revenue as it used to. Speaker of the House Chuck Kleckley, R-Lake Charles, said that oil prices make up about 12 percent of the state’s budget. In the past, oil revenue accounted for as much as 45 percent of the budget, said Sen. Ronnie Johns, R-Lake Charles.

“Louisiana has a very diversified economy,” Kleckley said. “I don’t think anyone knows the real effect of oil prices. Time is going to tell.”

Kleckley said he is unsure if the falling oil prices have affected the state’s existing budget woes. However, Rep. Brett Geymann, R-Moss Bluff, said the drop has compounded an already bleak state financial picture. Geymann sits on the House Appropriations Committee.

“We, for the past decade, have relied on one-time money, gimmicks and accounting tricks to balance the budget, instead of making tough political decisions,” Geymann said. “Now, it’s hitting us right between the eyes.”

Johns, who sits on the Senate Finance Committee, said the upcoming “budget crisis” is the worst he’s seen in his 16 years as a state lawmaker.

“It’s going to be the greatest challenge I have ever dealt with in balancing the budget,” he said. “It’s just a daunting task.”

The drop in oil prices has also affected the current fiscal year, with the Revenue Estimating Conference determining there is a $103 million shortfall. After last year’s session ended, Johns said oil prices were about $108 per barrel. He said the state budgeted “at about $88 per barrel” to account for any fluctuation in price. As of Wednesday, the price of U.S. crude sat at just over $48 per barrel.

“We were very conservative at that time,” Johns said. “But no one ever dreamed we’d be sitting at $45 to $50 a barrel.”

Rep. Mike Danahay, DSulphur, said the state should deal with the financial impact from tax exemptions. But a major tax structure overhaul won’t likely happen soon.

“I don’t think we’re going to correct the system as a whole,” Danahay said. “We’ll have to deal with this on a short-term basis. It is going to continue to plague us if we don’t address it.”

Johns said the state now exempts $6.8 billion of taxes through exemptions, tax credits and rebates. Meanwhile, the state’s general revenue is “barely over $7 billion.”

“We’re giving away almost as much as we’re taking in,” he said. “We have to ask different industries and businesses to work with us to come up with something that is sensible for our state budget and allows the business community to be competitive. I think that is a realistic goal.”

Louisiana is in an election year, and Gov. Bobby Jindal is serving his last year in office. Geymann said those factors could make it difficult to deal with the budget woes without “political courage and a lot of hard work.”

“We’re not in an advantageous position for us to be able to deal with this,” he said. “I hope the Legislature will do its job and solve the problem going forward.”

Johns said he has heard Jindal will unveil his plan to address the midyear shortfall Feb. 20. He said members of the Joint Budget Committee could discuss the plan at its Feb. 27 meeting.