Higher education, health care and solar and film tax credits are all on the chopping block amid Louisiana’s big budget crisis.
Meanwhile, WWL-TV reports tax exemptions for oil and gas drilling, which have cost state coffers $2.4 billion since 2008, have gone unscathed—and Monday is Oil and Gas Industry Day at the State Capitol. That has environmental activist and filmmaker Mike Stagg seething.
“If you’re getting $2.4 billion in severance tax exemptions and that’s not enough for you in an era when other people are getting cut … that’s greed,” says Stagg, a former gubernatorial and congressional candidate from Lafayette.
Stagg is preparing to release a documentary that shines new light on a series of legislative audits and revenue reports that sounded an alarm years ago about oil and gas tax collections and royalty payments.
It was unclear how much revenue may have been lost, but Stagg pegged the amount at potentially “hundreds of millions of dollars” based on the legislative auditors’ finding that audits that had once flagged tens of millions of dollars in unpaid taxes each year all but stopped for a period of about three years.
Most eye-popping was the 2013 Legislative Auditor’s report that found a 99.8% drop in unpaid severance taxes identified in state tax audits between 2010 and 2012—from $26 million to just over $40,000.
Meanwhile, the state collected significantly less in total severance taxes for oil and gas production on private lands, in spite of an explosion in shale gas drilling. In 2010, revenue from severance taxes fell by $154 million, a 17% decrease from the previous year.
So, what changed?
The responsibility for performing those severance tax audits was moved that year from the Department of Revenue, which handles tax collections, to the Department of Natural Resources, which regulates the oil and gas industry and hands out leases.
Stagg said that shift shows collusion between the regulators and the regulated, but DNR spokesman Patrick Courreges says it’s nothing so nefarious.
Courreges said a special Streamlining Commission recommended that Natural Resources take over the severance tax audits on private lands because it was already handling audits on 25% of the oil fields on public lands that pay state royalties.
“On paper it seemed like it should work. But the two functions just didn’t mesh,” Courreges says.
