Senate committee backs constitutional amendment to return a bigger share of severance taxes to producing parishes

The Senate Committee on Revenue and Fiscal Affairs reported House Bill 294 favorable after lawmakers and local officials pressed for returning a larger share of state severance-tax revenue to the parishes where oil and natural gas are produced.

Representative Trey Bagley, sponsor of the measure, told the committee the bill would send more of the severance tax back to producing parishes to help repair local roads and infrastructure that he said bear most of the damage from industry traffic. “This way, this money would be redistributed back to the parishes and according to how much the parish is paying, and hopefully we can get them some help there,” Bagley said.

Why it matters: Supporters said the cost of local damage and road repair in producing parishes far exceeds the local share they receive through current severance distributions. Opponents and some senators warned that shifting state revenues to parishes would require the Legislature to identify offsetting savings or new revenue, and that fiscal impacts over time are uncertain because severance collections fluctuate with commodity prices.

Local officials who testified said their parishes have received only a fraction of revenues generated from local production. Michael Norton, parish administrator for DeSoto Parish, said DeSoto’s receipts from natural-gas severance were “approximately $17,000,000 out of nearly $1,000,000,000 that has been sent to the state since 2002,” and asked the committee to raise the local cap so parishes could fund needed repairs. “We are the ones left holding the bag,” Norton said.

Guy Cormier of the Police Jury Association of Louisiana told senators that a cap on local revenue shares, currently set with CPI adjustments, leaves producing parishes short when production spikes. He recounted earlier efforts to raise the cap and characterized the bill as an equity measure for communities that host production and pay the wear-and-tear costs. “If you’re going to produce oil and gas in this state and you’re going to come and have wear and tear on our roads and infrastructure, we should get more of the fair share of that,” Cormier said.

Questions from senators focused on fiscal trade-offs and timing. Several asked how the state would make up the roughly $65 million annual shift referenced in testimony; Bagley replied he expects production growth over coming years to reduce the budgetary pressure, and he said he would accept phasing-in the change if that eased passage. Senator Bass pressed for a clear plan on offsets, and Senator Morris warned that the change would force hard choices about state spending. “Where do we cut to get rid of $65,000,000?” Morris asked.

Committee action: After the discussion, Sen. Bass moved to report the bill favorable. With no objections, House Bill 294 was reported favorable.

What’s next: The measure is now available for further consideration by the Legislature. Supporters said a constitutional amendment is required for the local-distribution change; opponents signaled they may press on fiscal offsets or phase-in timing on the floor.

Ending: Proponents said the bill is intended to give producing parishes more resources to repair roads and infrastructure damaged by industry activity; opponents cautioned the Legislature must identify how to absorb any state revenue loss or implement a phased approach. The committee carried the bill forward by unanimous consent.