Louisiana voters on Nov. 3 will decide the fate of a constitutional amendment that supporters say will provide a fairer and more accurate way for the state to assess the value of oil and gas wells.
Amendment 2 received the unanimous, bipartisan support of state lawmakers and does not have any formal opposition. The Louisiana Oil and Gas Association (LOGA), Louisiana Midi-Continent Oil and Gas Association and the Louisiana Assessors’ Association all agree that the measure would bring more predictability and accuracy to the generation of tax revenues.
The measure might also reduce litigation over such assessed evaluations, according to a summary of pro and con arguments on state ballot measures published by the nonpartisan, nonprofit Public Affairs Research Council of Louisiana.
Under the state constitution’s current provisions, assessments of oil and gas wells can be done through either an estimation of the replacement costs or the market value. Amendment 2 would provide a third method: a well’s ability to produce revenue.
“The amendment brings a fairness to the assessment process for the oil and gas industry, 90 percent of which consists of small businesses,” Mike Moncla, LOGA’s interim president, said in a prepared statement. “When independent operators can reliably predict their costs, they can allocate more to supporting and expanding their workforce. Fairness and predictability lead to more investment.”
The pro argument published by the Public Affairs Research Council, which doesn’t take positions on the ballot measures, states that Amendment 2 may lower the unfair tax burden on low-producing wells.
“It will mean that newer, richer wells will tend to be valued higher than older, poorer wells, which is not necessarily the case now,” the pro argument says.
The con argument notes that some parishes could receive more property tax funds if the measure passes and that others could get less.
“While the amendment allows a new assessment method, a better solution would be a broader and more fundamental change to create a constitution that allows the legislature more flexibility with state fiscal policy,” the argument states.
The con argument presented by the council does not reflect the formal position of any organization, according to Steven Procopio, the council’s policy director.
“I don’t know of any group, including ourselves, that is taking a position against this amendment,” Procopio told the Louisiana Record. He added that the con argument reflects the idea of getting such details out of the constitution and putting them into statutes.
“We just kind of sat down and said, “OK, if we had to come up with arguments against this amendment, this is something that someone could come up with,’” he said.