American Oil and Gas Reporter - February 2017 - 94

ConventionSection: Louisiana Oil & Gas Association
A district court judge dismissed a lawsuit
filed by Jefferson Parish, ruling local
officials filed the action before all administrative remedies were exhausted. A coastal
erosion lawsuit filed by Vermillion Parish
has stalled because AG Landry's actions
have blocked the governor's push for private
attorneys, Briggs says. As of early January,
only government entities had filed lawsuits,
he observes, which leaves open the possibility that landowners could pursue their
own claims in the future.
According to Hanks, the governor's
targets are larger companies with assets
capable of paying huge settlements. "Other
situations with environmental issues that
have been blamed on some of the majors
suggest there is not going to be a quick
solution. This will take years to resolve,"
he predicts. "The governor came into
office thinking he could force a quick
resolution, but that is not reality."
LOGA always maintains that its member companies are good corporate citizens,
Hanks points out.
"On their own, oil and gas companies
have contributed to local communities in
many ways," he says. "Those companies
have led the way in many restoration
projects, but according to that small group
of trial lawyers and some legislators, that
never will be enough. It is a money grab,
plain and simple. The Army Corps of
Engineers shares responsibility by building
levees. There also are arguments about
rising sea levels, and the issue of land
subsidence. What fabulous plan is there
that will prevent or change any of that?"
Annual Meeting
Most LOGA members will come to
the March annual convention in a slightly
sunnier mood than they have recent years,
Briggs predicts. There will be excitement
over the potential for higher commodity
prices, increased activity and renewed
hiring, but the likelihood that Louisiana
will see a significant jump in oil and gas
investment is low, he assesses.
Hanks adds the association is pushing
hard to secure high-level speakers, and
the early lineup looked exciting. "The
association is getting positive feedback
on speakers already, and renewals for
meeting sponsorships are going well,"
he said in January.
"The oil and gas industry is resilient;
most of our members have been working
here for a long time," Hanks says. "LOGA
will celebrate its 25th anniversary in October, so the core constituency is hanging
94 THE AMERICAN OIL & GAS REPORTER

tough. We have been through these times
before, and are looking forward to finding
solutions for this crisis. The convention's

theme will be positive, not doom and
gloom. I anticipate a good, if not better,
crowd this year."
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Louisiana Legislators Deadlock
Over Fixing State Budget Crisis
BATON ROUGE, LA.-Louisiana's
budget crisis has begun the new year in a
political stalemate, with Democrats in
the governor's office and legislature saying
there is no state spending left to cut, and
the Republican-controlled House and
Senate opposing any tax increases, reports
Gifford Briggs, acting president of the
Louisiana Oil & Gas Association.
Media reports indicate Louisiana's $27
billion operating budget has a shortfall of
at least $300 million, and the state is unlikely
to have enough money to fund programs
and services through the next budget year.
News articles point out this will be the
state's 15th midyear budget gap in nine
years, and that in some years the size of the
financial gap has widened multiple times.
One source suggests Governor John
Bel Edwards' likely response is to include
tapping the state's "rainy day fund" for
$119 million, the maximum allowable.
That fund has decreased from $853 million
in 2009 to $359 million today, news
sources indicate.
Legislators and the governor compromised in late December on a fiscal plan
that relied on hiring and spending freezes
to close a $313 million deficit left over
from the previous financial year, media
reports say. The compromise also included
postponing for one year $152 million in
payments to Medicare providers.
Like other states, Louisiana's constitution prohibits budget deficits, Briggs
observes, which provides another push
for legislators to resolve the shortfall.
"What is left to cut in the budget depends on whom you ask," he says. "The
governor has said there is nothing left to
trim. The Democrats in the legislature
do not feel there is much to cut. A bunch
of senators feel that way, but then there
is a group of conservatives in the House
and Senate who feel the state cannot
raise any more taxes, and so cuts are the
only option available."
Legislators enacted $1.5 billion in
temporary taxes in 2016, including an
additional one cent sales tax that raised
the state level to 5.0 percent. They also

removed a host of tax exemptions, including a sales tax on businesses and
utilities. Briggs notes the utilities sales
tax was phased out a few years ago in an
effort to make Louisiana more attractive
to businesses.
Recommendations
According to media reports, a task
force on structural budget changes presented recommendations to state legislators
late in 2016. Its suggestions include
cutting the state sales tax to 4.0 percent,
expanding the sales tax base to include
nonresidential utilities, and retaining the
recently-eliminated exemptions. Recommendations for corporate tax laws include
ending the state corporate income tax
deduction for federal income taxes, amending the Louisiana Constitution to replace
the graduated income tax rate that ranges
from 4.0 to 8.0 percent with a flat rate of
6.5 percent, and eliminating the state income and franchise tax credit for ad valorem taxes paid on inventory.
Legislators are holding a special session
this month to consider those measures,
and will return to the statehouse in the
middle of April for a regular fiscal session,
Briggs says. He warns that although the
oil and gas industry's economic struggles
are keeping it off legislators' list of likely
targets, operators should not feel completely relieved, especially since Louisiana
already imposes the country's highest
severance tax.
On the federal level, Briggs says
LOGA hopes Republicans in control of
the White House and Congress can take
advantage of their political power and
pass pro-industry legislation.
"Obviously, they have their sights set
on the Affordable Care Act and other
types of tax reform," he says. "I know
those issues are big, and the healthcare
expense piece is pretty big, but if we
could roll back some regulations, that
probably would be the best thing the
(federal government) could do to get the
economy, and the oil and gas industry,
rolling again."
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American Oil and Gas Reporter - February 2017

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