The price of oil has dropped more than $10 per barrel over the past month, with West Texas Intermediate selling for $47.82 per barrel as of this morning, off 1.4% on the day so far. And many of the fortunetellers of fossil fuel finances are now saying this is the new normal.
But the state’s budget chief tells 89.3 FM WRKF that the state’s budget for the fiscal year that began June 1 doesn’t need to be tweaked due to the oil price decline just yet.
“Fortunately for Louisiana, we took the most conservative pricing as we built the forecast for FY ’15, FY ’16 and ’17,” says Commissioner of Administration Kristy Nichols, adding that Louisiana’s revenue stream is no longer as heavily dependent on oil as it once was. “Oil prices may go down, but where income tax collections, sales tax collections, corporate income tax collections come in higher, we’re able to make all of those adjustments.”
Nichols tells WRKF that the state is monitoring the oil price slide, but no one is yet ready to say the annual budget needs significant alteration.
“You have to remember it’s an average over the year,” the commissioner says of the $61 per barrel price figured into the current budget. “So when you look at the markets and you look at the oil prices that we have in the forecast, we’re very, very safe in terms of our overall projections.”
Nichols’ equanimity is not simply stoicism, or part of presenting a unified front as part of the Jindal administration. She has a valid and logical reason for trusting that Louisiana’s budget remains sound.
“Something that Louisiana does very well—and other states don’t operate like that—is we have Revenue Estimating Conference,” she explains. “We have a very fluid revenue estimating process, and at the time they make adjustments, they make real-time adjustments.”
Other states review their revenue projections once or twice a year, she says, while Louisiana’s  REC meets at least five times annually.
“We can call Revenue Estimating Conference anytime we want,” Nichols says.
Though not scheduled to meet again until the fall, should oil prices remain at the current level, the REC may convene sooner to adjust the forecast, she says.
