Stricter offshore drilling rules upset industry; ‘bad news for Louisiana,’ Sen. David Vitter says _lowres

A more certain market buoyed by higher oil prices and more demand is key to increasing drilling activity in the Gulf of Mexico.

One of the problems with Louisiana government is the long and unwieldy state constitution, requiring statewide votes on all sorts of issues.

The Public Affairs Research Council of Louisiana summarized the arguments to be made against several amendments before the voters on Oct. 12 in one sentence: “The amendment is a good example of using the Constitution for minutiae instead of for fundamental law.”

True, and many voters might be wanting to send a message by voting such minutiae down. But the fact remains that amendments are the way — for now — that Louisiana legislates, and the issues involved require the voters’ attention. Here are our positions on the first two. We'll address the others in a future edition.

Amendment 1: Offshore services property tax — For

Louisiana businesses support a vast offshore oil and gas business that is vital to the nation and the world, and most of that energy production is in federal waters of the Outer Continental Shelf. For decades, goods destined for offshore rigs were assumed to be in interstate commerce and not subject to property taxes while stored in Louisiana’s coastal parishes.

Several coastal parishes are now seeking to charge the companies tax on materials destined for the OCS. This is a novel legal approach and one that is likely to be embroiled in state and federal courts unless Amendment 1, sought by the oil and gas industry, is passed by voters. Legislators approved it 83-12 in the House and 35-0 in the Senate.

While we generally believe that the tax base of local governments should not be restricted, there is a legitimate competitive argument that materials might be stored elsewhere along the Gulf Coast if the amendment is rejected.

The major energy companies can’t do anything about the price of oil, but they might well, in a time of lowered profits, react unfavorably to new tax burdens. We urge voters to approve this amendment and restore the tax law to the status quo before this novel approach is taken into the unpredictable waters of the state and federal courts.

Amendment 2: Special grants to public schools and LPB — For

Public school systems, because of a long-ago trust established from a legal settlement with tobacco companies, receive annual grants from the Education Excellence Fund. Several individual schools also receive the grants: one for deaf and blind students, another for gifted students in Natchitoches and the New Orleans Center for the Creative Arts. Amendment 2 adds the laboratory schools at LSU and Southern University in Baton Rouge to the list of recipients, as well as the new Thrive Academy in Baton Rouge, a residential public school. Other parts of the amendment would allow the Louisiana Educational Television Authority to get grants of the same amount, $75,000 per year; there is also a per-student allowance for the schools.

It’s about the same amount of money for each and not much in the large scheme of billions spent on public education every year. Since it’s from a trust account and not the state’s general fund, it provoked no controversy and passed the Legislature unanimously.