As citizens fill out their state income tax returns this week, many who itemize are happily surprised to see that they can deduct 57.5 percent of their mortgage interest payments and charitable contributions. With those deductions to be fully restored in two years, the repeal of the Stelly Tax Plan is well underway. Depending on what the Legislature does with taxes in the rest of this session, the much-taken-in-vain name of former legislator Vic Stelly could soon fade from the political lexicon.
It could be replaced, with honors, by that of Sen. Buddy Shaw, R-Shreveport. His bill to return income tax brackets to their pre-Stelly 2002 levels initially was given little chance of passage but has since taken on a life of its own. Over his objections, it was amended in the Senate to phase out the entire income tax over ten years. When Shaw's proposed $302 million tax cut ballooned to $4 billion, House leaders called time out to slow down the runaway train before it collides with the budget.
At a time when richer, more progressive states are struggling with spiraling budget deficits, backwards Louisiana is reducing taxes while raising teacher salaries and pumping hundreds of millions of dollars into highway construction, universities and--a need uniquely ours--coastal restoration.
The causes of this happy peculiarity were examined at last week's meeting of the Revenue Estimating Conference. It is a body of three state officials and a LSU economics professor, who, based on the analysis and recommendations of professionals, must unanimously agree on revenue projections that the Legislature will use to write the budget. This constitutional process replaced the old system, in which, basically, Edwin Edwards picked a number.
Recently, the toughest job for estimators has been to keep straight faces while they lowball predictions on oil prices. Every $1 uptick adds $12 million to the state treasury. So they have to play it ultra safe, because anyone around state government in the early '80s remembers the horror of revenue projections being caught on the wrong side of an oil bust.
With all due restraint, panel members pegged the oil price at $84 for the next fiscal year--motorists should be so lucky--resulting in $820 million more available for the current budget and the one beginning July 1. But if prices continue north of their current $125 per barrel, those estimates could be jacked up another half billion or so at the September meeting.
The new oil and gas boom sloshes all over the budget. Corporate income taxes driven by the energy sector have spiked. Six thousand well-paying extraction jobs have been added in the oil patch. Sales taxes have leveled off but have kept their high levels from recovery spending.
Then there's the personal income tax, which makes up about a third of the state general fund and is steadily rising. Its recent growth is due less to the Stelly Plan, already factored in, than to workers making more money, and more workers reporting it. The number of resident tax filers is growing because, according to state economist Greg Albrecht, more are taking full-time jobs and getting W-2s instead working part-time, or intermittently, and taking cash under the table. That was the most encouraging comment I took from the whole meeting.
With the robust revenues, the Legislature can eliminate the $302 million in Stelly taxes and still balance the new budget with the use of some one-time money. That would still leave a healthy surplus for the current budget year, which can be plowed into another round of big highway projects, coastal restoration and debt service.
Sen. Shaw has asked and deserves to have his bill returned to its original form, minus the income tax repeal amendment. The repealers can come back with a clean bill of their own next year. By then revenue estimators might be more comfortable with--and we'll be resigned to--stable triple-digit oil prices. But for now, to go any further any faster in cutting the tax base would be betting on the oil boom lasting indefinitely, which we promised ourselves never to do again.
And the only way this is going to happen is if we cut spending here at home, export like crazy, get a more desireable standard of living cost, along with a few more strategic moves..... In other words, Piss on Piyush, Obama, Clinton, they are not what is or can make it happen. It is up to you, the worker, the voter, the American living here in America................................... Written by
on 5/19/2008
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Nov. Oil, $75.00+/- per barrel,,,,,,,,, March, 2009,, $62.00+/- per barrel… Aug....2009.... $54.00+/- barrel Written by
on 5/15/2008
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You hit a numer of nails on the head KPF..... And the cost of 'lifting' oil out of a product correctly termed as 'hole' is in line. I am not contesting that. And as I previously stated, + or -, 20+ dollars per barrel total recovery/production costs.... Now start to talk about cost averaging or lump summing production, transportation, refinement, marketing, advertising, packaging, distribution, etc, etc., and the costs incurred still do not justify the $125+ revenue yeilds we are witnessing. And even now the waters are being tested for 200, 300, and the shock value comparison/projection of $400 a barrel. At least by forecasters in the situation rooms. As if prepping us for a shock. It is supposed there could be an artificial balloon event, and the bubble should burst, I do not count on it. Once up, they do not want to go back.... Then couple the domino effect of associated and abstract markets and holdings be they soybeans or gold, the balance where stocks fail to yield percentage increases is struck by holding resources or commodities hostage..... Ehhhh, this could turn into a GDMM'd book, but anyways, you do have your act together KPF. Written by Bahhhhhhhhhhhhhhhh,,,, tax me! Bleed me dry!!!
on 5/14/2008
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Daaaaayyyaaaaammmmm..... Now I have to go see the optomitrist and spend another $100.00 because of the .02cents worth below!!!!!! Written by Ehh,, Maybe blissfull ignorance has its advantages
on 5/14/2008
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Increased demand with decreasing AND higher priced supply will keep the prices up - or perhaps I'm wrong, time will tell. I'm sure there are "market fixers" who will try to manipulate this, but regardless of what these men "behind the curtain" want higher priced oil is inevitable methinks. Obviously with our education we share the same fight song:
http://www.bennygrunch.com/song_lyrics.html
Written by kpf
on 5/14/2008
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Oh, and the below post was in relationship to the goofy paragraph written in the above story line by that genius John Maginnis ……. [With the robust revenues, the Legislature can eliminate the $302 million in Stelly taxes and still balance the new budget with the use of some one-time money. That would still leave a healthy surplus for the current budget year, which can be plowed into another round of big highway projects, coastal restoration and debt service.] Written by .I'm about to go cross eyed reading stupid crap...
on 5/14/2008
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And of course you could look at things this way: $302,000,000.00 divided by 4,000,000 people in Louisiana equals $75.50 divided by 12 equals $6.29 divided by 28 equals .22 cents per day per person, per man, woman and child....... Hmmmm, now I wonder how far $302,000,000.00 would go towards helping out with health insurance problems, or health care in general..... Because the way I see it, .22 cents per day divided by 8 equals around .02 cents per hour X a family of wut?????? Written by ..Any way you slice it or dice it, it adds up to..
on 5/14/2008
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That don't make no sense KPF. Economics 101 supposedly states that the greater the production factors, the lower the cost values..... So doesn't increased demand coupled with increased production equate to increased jobs, and lower costs involved for living? Unfortunately the economics gurus that fix the markets or fix our taxes do not agree. So what is the answer???? Oh I know,,,,,,,,,,,,,,,,,,,, I would suppose that it is either “They want to have their cake and eat it too”, or it is “If they don’t have bread, then let them eat cake”. Holy B'Cheezus those Macadamia Academia nut geniuses sure do like to confuse us now don't they.... And when cranking out students gets boring, they go to work for the State...... Written by Now you know why I dropped out of High School
on 5/14/2008
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OH KA-KA!!! I meant "increased demand" - dang-nab-it! Written by kpf
on 5/14/2008
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I'll not disagree there is much profit in oil exploration and production. I will say however that profit is no certain thing. The price of anything in Venezuela - with their cheaper labor and far less stringent environmental controls no doubt leads to cheaper goods than here; I imagine the state and federal taxes on a gallon of U.S. gasoline alone is greater than the price you quoted on a gallon of Venezuelan gasoline. Also if gas is that cheap there a true “free” market would allow entrepreneurs to transport that gasoline here for our consumers; no doubt the laws preventing this are "for our own good.". Although there are successful prospects in the GoM there are also structures that were built for hundreds of millions of dollars, drilled for many millions more which will never pay out. One must look at the losses as well as the successes if one does not wish to sound like someone addicted to gambling who only discusses their “winnings.” I realize OPEC and other oil exporters wish to keep the price up but if keeping crude oil off the market to keep the price high is the plan, one wonders why the price of crude from 1980 to 2000 was in the $20 per barrel range. The Lehman Brothers study found that "industry's costs to find and develop oil in 2006 averaged about $20.40 a barrel, four times the $5 a barrel cost in 2001." This increased cost represents existing (cheaper to find, develop and produce) oil and the much more costly subsea production. The world is using ever more crude, in the not too distant future most of the world's new production will come from deepwater subsea wells - the deeper these are the more expensive the cost to "lift" each barrel will become. My current group includes a prospective Alaska production group; producing in Alaskan waters that are iced over 10 months out of the year will also be very expensive - WAY more than 20-30 dollars a barrel - perhaps - as this "per barrel cost" is dependant upon "how much" crude is produced per day. I'm not saying these b@$tards aren’t greedy - I've been stuck on offshore production facilities during hurricanes too often to believe otherwise - but I do think increased supply and ever more expensive crude will keep prices up even without market price manipulation.
http://en.wikipedia.org/wiki/Peak_oil
Written by kpf
on 5/14/2008
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But to keep it simple I will merely quote a quip I remember from a book authored by J.Paul Getty that I read several decades ago.......... "To make something valuable, first you must make it rare".... Written by Because the below post is prone to argument
on 5/14/2008
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Interesting can of worms you opened there KPF. The Shell oil ‘BULLWINKLE’ platform in offshore waters? 1,350’ depth water depth, 1,750’ total height. $500,000,000.00 cost of construction. 80,000 barrels per day production. @ $125.00 per barrel equals $1,000,000 per day……. Current prices… This facility has been in operation for over 2,555 days……. And Shell’s ‘URSA’? Final gross ultimate barrel recovery from drilling/production activity is estimated to be at approximately 400 million barrels before ‘tapped out’. @ $125.00 per barrel, if this were a static condition from exploration to retirement, would equate to $50,000,000,000.00 USD. (That is 50 BILLION DOLLARS). Of course there is also Shell Oil companies ‘MARS’ production facility in offshore waters…. It by itself equals approximately 5% of the daily oil production in the Gulf of Mexico. It is currently producing at approximately 75% of its pre Katrina production capacity……. Or somewhere around 190,000 barrels per day……. @ $125.00 = $23,750,000.00 per day…….. Now that is barrels of oil, we have not considered the price per gallon at the pump. According to an LPB (Louisiana Public Broadcasting) show I saw, I was able to ascertain that a gallon of gasoline in Iraq costs somewhere in the neighborhood of .24 - .35 cents per gallon. According to a CBS news report I saw a month or so ago on the T.V., gasoline is bought in Venezuela @ .14cents per gallon and smuggled to Columbia…… The accepted costs associated with exploration, production, and transport to market has been stated by several ‘leading industrial analysts and experts’ to be anywhere from $20.00 to 30.00 per barrel…….. World wide. So what you are really dealing with is “What the Market Will Bear”…… Not supply and demand…………. Refining capacity is not the issue due to a lack of refineries… Refineries can be added on to in lieu of ‘new’ refineries…… China and India?? No, it is all in cost accounting, profit projections and forecasting, the stock market, etc., etc., etc…… I mean seriously,,,,,,,,,,,,, ALMOST 24 MILLION DOLLARS A DAY FROM ONE PRODUCTION FACILITY????? Written by Numbers? Do you really know what they are?
on 5/14/2008
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A true conservative knows that government (especially Louisiana state government) is the most inefficient organization on earth. Therefore a true conservative knows that 1) limiting the resources available to such an organization is a good thing. Then a true conservative knows that 2) government must then be forced to utilize its still generous resources to provide necessary services efficiently and cost-effectively.
Goal #1 may be possible. Goal #2 is impossible in Louisiana thanks to ignorant voters and the scumbag politicians they continue to elect. But the inevitable doom of goal #2 does not mean that we should not strive for goal #1. Written by ralphie
on 5/14/2008
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Now is the right time for the conservatives to really be how I define conservatism, i.e. prudence, caution in the face of temptation and so on and to think and act carefully rather than on a whim and purely to look good in the immediate term to voters. Written by Richard P.
on 5/14/2008
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Two factors which will - in all likelihood - keep crude oil prices high are: 1) the increased demand from China & India 2) the fact that more and more of our future crude oil supply will come from deepwater sub sea wells (these wells are much more expensive to drill, set and maintain). These two factors alone should prevent the price dips as seen on the graph below. Speaking of which, what other commodity’s price - in constant dollars - has generally remained around the same price (~ $20 per barrel) for over 100 years as in the case of crude oil? I think the days of $20 barrel oil are over - despite others having said this before and been proven wrong.
http://www.wtrg.com/oil_graphs/oilprice1869.gif
Written by kpf
on 5/14/2008
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Tonight:
