Lafourche mineral royalties down nearly 35 percent

In Lafourche Parish, royalties received from oil and gas production on its land that help pay for things like roads, drainage and even civil defense.

But with the price of a barrel of oil the lowest it’s been since 2009, the slice that the parish gets is coming from a much smaller pie.

According to Renita Jackson, director of finance for Lafourche Parish, royalties the parish collects is down nearly 35 percent this year compared to collections made by this time in 2014, down by over $1 million dollars.

What that means for citizens of Lafourche Parish is those dollars that were used to build drainage projects, repair roads, and help out the animal shelter if they are short of cash isn’t as plentiful as it was in years past.

But the hit to mineral royalty shares collected by Lafourche Parish is a slow bullet that won’t be felt until 2016.

“We’re not going to see an immediate impact only because we already had a decent [mineral royalties] fund balance for [20]15 and because the parish president has decided not do [start] additional projects scheduled for 2016,” Jackson said. “We want to still have a decent fund balance [to start those projects].”

Essentially, the parish collects mineral royalties continuously each year, but the money isn’t spent until the following budget cycle. No project, purchase or department’s budget is dependent on mineral royalties because parish officials don’t know for sure how much money they will truly get from mineral royalties each year, Jackson said.

So, with the reduction in mineral royalties, 2016 will have very few construction projects started in Lafourche Parish. The only insulated parish offices are the seven recreation departments. They each collect their own taxes and “historically have healthy fund balances,” said Archie Chaisson, administrator for Lafourche Parish.

In 2014, Lafourche Parish collected $5.7 million in revenue from mineral royalties. Jackson presented Lafourche Parish’s proposed operating budget to the Parish Council on Sept. 22. It projects that the parish will only collect a little more than $4 million from royalties.

But that money is there to supplement budget shortfalls when they come up. For example, last year, $2.5 million was taken out of the royalty account to pay for drainage projects. More than $1.2 million was spent on simply balancing the budget.

Other parish departments and programs benefitting from those royalty dollars included the Lafourche Parish Animal Shelter, the Commission of Women, Road Sales Tax District 2, the Lafourche Parish Library, the South Lafourche Beachfront Development District, and even civil defense.

“If we continue to see the downward trend, we’re going to have to start cutting back on spending for some of these programs and projects,” Chaisson said. Some of those programs don’t have any dedicated sources of income, so they will suffer first and foremost.

“The mineral royalties fund has historically been kind of a lagniappe fund for us,” Chaisson said. But Chaisson said the reduced mineral royalties Lafourche Parish collects is not nearly as great a concern as the potential reform of the watercraft tax credit offered by the State government.

The Louisiana Senate voted not to pass a constitutional amendment to exempt offshore vessels from paying property taxes to coastal parishes last legislative session. The amendment would have freed the state from having to reimburse vessel owners a full tax credit for that parish tax.

The tax, which goes to parishes but then is refunded to vessel owners by the state, was the target of legislators seeking to close a $1.6 billion budget gap.

That credit was left untouched, but several Louisiana legislators have said the credit needs to be examined because it essentially uses state money to fund parish governments.

“It’s already come back up in that it’s going to have to be addressed,” Chaisson said. “The legislature will likely have a special session in the early part of January. That’s our bigger fear because that’s 40 percent of our budget versus just a couple of million dollars of royalty dollars.”