The second proposed constitutional amendment on the Nov. 2 ballot will ask voters whether the state should triple the amount of money each parish receives for producing oil and natural gas.
According to the Louisiana Constitution, energy-producing parishes are allowed to keep 20 percent of the severance taxes they generate from oil-and-gas production now, with an annual cap at $850,000. The cap is adjusted annually for inflation, and last year’s total for the calendar year was $907,534 per parish.
But Amendment 2 would fatten that maximum to $2.85 million over a two-year period.
The sharing of severance taxes goes back to the 1921 state constitution and relates to all natural resources except sulphur, lignite and timber. The sharing process was needed because local governments were complaining about the wear and tear energy production was placing on their roads, bridges, wetlands and waterways.
That theme remains today, and Amendment 2 clearly stipulates that at least half of the proposed increase would have to be directed to transportation needs.
Locally, the amendment could mean more money. In 2009, Lafayette Parish collected nearly $9 million in oil and gas severance taxes alone, based on figures compiled by the Department of Natural Resources.
The amendment came about through Act 541 by Rep. Rick Gallot, D-Ruston, which was supported unanimously by lawmakers from the Acadiana area. According to an analysis by the Legislative Fiscal Office, the amendment could mean a combined boost of $47 million a year for 30 parishes.
The proposed amendment has several boosters ranging from Gov. Bobby Jindal and Citizens for a Better Louisiana to Louisiana Ducks Unlimited and the Louisiana Oil and Gas Association. The Police Jury Association of Louisiana created a political action committee to raise and spend money to promote the passage of Amendment 2.
Police Jury Association Executive Director Roland Dartez has labeled it the “fair share amendment” and said the money will be used to “build roads and bridges” across the state. “It will also provide funding for general parish services,” Dartez said.
Jim Brandt, president of the Public Affairs Research Council, said opponents question the need for the state to give up more revenue to benefit parishes that already receive other money from the economic activity associated with severance operations, like jobs and sales taxes. If mineral resources are considered assets of the state as a whole, then the dedication prevents the state from using its revenue where most needed, opponents argue.
In 2006 and again in 2008, voters were presented with similar constitutional amendments to alter the severance-tax cap. The 2006 amendment increased the cap from $750,000 to $850,000, along with an annual inflation adjustment, which is where the maximum remains today.
In 2008, voters were asked to raise the limit to the $2.85 million level the current amendment proposes, but voters statewide rejected the idea. However, it passed by 55 percent in Lafayette Parish.
This time, supporters are hoping for a different outcome. “Supporters of the current proposal say the ballot language in the 2008 proposal made it seem to some voters as if a tax increase rather than a tax shift was being proposed,” Brandt said. “The new ballot language presents the change as a decrease in the amount of taxes the state retains rather than as an increase in the amount of taxes the parishes receive.”
Amendment 2 would also create the Atchafalaya Basin Conservation Fund. The fund would support new projects by dedicating half of all severance- tax collections from state lands in the basin to the fund, or up to $10 million annually.