A member of the Governor’s Task Force for Transportation Infrastructure Investment says an increase in the state fuel tax could be a viable way to finance Louisiana’s future infrastructure needs as well as certain designated “megaprojects.”
Ken Naquin, secretary/CEO of Louisiana Associated General Contractors, says doubling the current state tax rate of 20 cents to 40 cents per gallon could generate up to $600 million per year. The task force, of which Naquin is a member, expects to deliver its funding plan at the beginning of the year. The fuel tax increase is one proposal being considered by the task force, but is not “set in stone,” he says.
Naquin was a guest panelist at today’s Louisiana Chemical Manufacturing Initiative Conference in Baton Rouge. LCMI is one of 24 designated manufacturing consortia participating in the U.S. Economic Development Administration’s Investing in Manufacturing Communities Partnership.
Through the program, the EDA coordinates federal aid to support development plans, synchronizes grant programs across multiple departments and agencies, and encourages communities to develop comprehensive economic development strategies.
“Louisiana is third from the bottom, nationwide, in fuel taxes,” Naquin says. “If we double it, we would still be eighth from the top. Every penny brings in $30 million; $600 million would allow us to address our annual needs and set aside money for a 10-year bond program to address some of these megaprojects.”
Megaprojects are generally those that cost more than $50 million and are geared toward improving traffic flow or enhancing other modes of transportation, such as ports and rail.
Naquin says an improved infrastructure would make Louisiana more attractive to manufacturers. “When you look at an industrial project, such as the Sasol plant in Lake Charles where they have to put in 90,000 piles while traveling over a two-lane state highway, with a ditch on each side, it just doesn’t work,” Naquin says.
He adds that infrastructure improvements would enhance the state’s ability to compete with neighboring Texas, which currently invests an average of $12 billion annually on its infrastructure, compared to just $550 million in Louisiana.
“Industrial owners, particularly in the New Orleans and Lake Charles areas, are saying there are two big issues—workforce development and infrastructure,” he says. “They’re saying we can’t get our construction people, goods and services in and out of our plants.”
Tom Yura, senior vice president and general manager at BASF’s Geismar plant and keynote speaker at the conference, says infrastructure is a key building block for attracting and maintaining industrial investment.
“If we can’t effectively move our products and get our workers in and out of the plant, we can’t grow,” Yura says. “These are difficult decisions to make, but the time is now. If we don’t make these decisions and move on, we’re going to get stuck.”
Attracting industry through an improved infrastructure, favorable business climate and readily available workforce has taken on a heightened importance in the last two years as manufacturers have scaled back capital expenditures due to a sustained drop in oil prices. “The challenge is that oil prices have been low for so long. That has definitely, month by month, become a more acute issue,” says Rhoman Hardy, general manager of Shell Chemicals in Geismar, another panel member at the conference. “One month is not a big deal, but years and the prospect of more years is a challenge.”
Jonathan Shi, director of LCMI, says his group represents Louisiana’s chemical corridor from New Orleans to Lake Charles and comprises experts in sustainability, workforce development and small business development.