Problems with a computer upgrade at the Department of Revenue have delayed millions of dollars in severance tax payments owed to Louisiana’s parishes.
Louisiana shares the taxes it collects for oil and gas production from its land and water bottoms with the local parishes. Treasurer John Kennedy said his office hasn’t been able to make quarterly payments due at the end of December and March because it hasn’t received tax information needed from the revenue department.
The last payment was made six months ago in October.
“I think the parishes have been very patient. But we’ve started to get a lot of calls going, ‘What is the deal? Who’s running this thing?’ And we’re starting to get a lot of calls from legislators. I’m telling them I can’t write checks when I don’t know the amount,” Kennedy said.
The revenue department said the computer glitch has been fixed and money should begin flowing to parishes by April 10. Agency spokeswoman Kizzy Payton said in a statement Wednesday that the tax information will be submitted to Kennedy’s office early next week.
She said the department “would like to apologize for any inconvenience and problems that may have occurred as a result of the delay. Going forward, the department does not anticipate any additional interruptions regarding severance tax distributions.”
The precise figure of how much is owed to the parishes isn’t clear because the data wasn’t yet available. But more than $30 million was doled out to the state’s 64 parishes over the same two financial quarters last year, according to treasury figures.
“It’s a substantial amount of money, and the parishes that need the money are also the parishes that are suffering the brunt of the energy price declines. It’s sort of a double whammy,” Kennedy said. “I wouldn’t call this best practices.”
Payton said the delay was the byproduct of a $2 million computer upgrade of the agency’s tax administration system, through a contract with Colorado-based Fast Enterprises LLC.
“It is the first modernization of this system since 2004, and it was a complex conversion that was being implemented simultaneously while the department administered (a tax) amnesty program, adopted New Year’s changes, launched the annual tax season and upgraded to a new image processing system,” she said.
The department and Fast Enterprises are still trying to determine what caused the computer problems, and no penalties against the vendor have been discussed, Payton said.
Kennedy said the state has paid too much money on computer upgrades that have encountered problems in recent years.
“We have all these new Cadillac systems, but none of them seem to work,” he said.