Oil pumps up state budget
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State economists on Friday largely credited booming oil and natural gas prices for generating an additional $824 million for state government to spend.
The recognition of the extra money by the Revenue Estimating Conference — the four-member panel that decides how much the state has to spend — likely bolsters a movement at the State Capitol to eliminate the state income tax, said Baton Rouge Republican Rep. Hunter Greene, the chairmen of the tax writing House Ways and Means Committee.
However, state officials said they are worried about the state repeating history by becoming too reliant on volatile oil prices.
“I don’t want to see us become an oil-based budget … . We sure don’t want to go back to those days,” said House Speaker Jim Tucker, R-Terrytown.
The conference recognized:
- An additional $462 million for the state spending year that ends June 30.
- An additional $362 million for the state spending year that begins July 1.
The state’s chief economist, Greg Albrecht, said there is a lot of upside potential for the state in the oil and natural gas sector.
The boom in prices is supporting income tax collections and spending, he said.
Albrecht cautioned that oil prices cycle.
“This looks like the late 1970s to me,” he said.
Three decades ago, state government’s fortunes were aligned with the oil market, which was booming. The state’s finances plummeted with the decline of oil prices and prompted state officials to diversify the state’s revenue base.
On Friday, the price of crude oil was $126 a barrel on the New York Mercantile Exchange — $9 higher than it was three weeks ago.
Economists Albrecht and Deborah Vivien were given the task of predicting what oil prices and other revenue sources will generate in the coming months and budget year.
The revenue panel picks one of the forecasts, which is used to guide the state’s spending.
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Saturday, May 10, 2008
6:17 AM