DALLAS -Louisiana expects to collect hundreds of millions of previously unanticipated dollars over the next five years from severance taxes on historically high oil and natural gas prices.
Also boosting revenue are higher income tax collections due to strong employment growth in a vigorous energy sector.
The state's four-member Revenue Estimating Conference on Friday unanimously adopted new projections from the Legislative Fiscal Office that add $462 million to the projected general fund surplus in fiscal 2008 and $362 million to the fiscal 2009 surplus.
The surpluses are in addition to those in the report approved by the conference in December 2007, which raised the estimate for general fund revenues in fiscal 2008 to $9.49 billion and for state general fund revenues in fiscal 2009 to $9.27 billion.
The latest report from Greg Albrecht, chief economist and director of the economics sector at the Legislative Fiscal Office, also increased the projected surpluses by $364 million in fiscal 2010, $294 million in fiscal 2011, and $269 million in fiscal 2012.
About a third of the fiscal 2008 surplus can be attributed to the effects of higher energy prices, Albrecht said, as can $300 million of the fiscal 2009 surplus.
"It's an increasing reliance on oil and gas," he said.
The state's constitutional limit on spending does not allow the Legislature to spend the money without a two-thirds vote by lawmakers raising the limit. That's not likely, said House Speaker Jim Tucker, R-Algiers, a member of the estimating conference.
"These dollars are not rolling into direct expenditures, unless the Legislature raises the expenditure limit, which I don't see happening," Tucker said.
If the additional revenues are not included in the proposed state budget for 2009, the money would be declared surplus.
That would allow the Legislature to spend the money to reduce or retire the state general obligation bond debt, reduce the unfunded liability in the state's pension systems, or for capital outlay projects.
The report accepted by the estimating conference uses an expected average oil price of $92.35 per barrel in fiscal 2008, $84.23 in 2009, $72 in 2010, $68 in 2011, and $67 in 2012.
Those projections are conservative, Albrecht said, with the price of a barrel of oil currently hovering around $125. He said the price per barrel was estimated by using an average of anticipated oil prices from government and private sources.
"As we do this type of process, the forecast becomes obsolete monthly," he said. "Even the price of $84 a barrel, which is $40 less than the current spot price, is $10 higher than we estimated in February."
Albrecht said there is little historical precedence for the rapid increase in energy prices over the past few months.
"I've been in meetings where I've said this looks like 1979, but this is not the same world," he said.
The report also predicts an increase in natural gas prices of 72 cents per MBTU (one million BTU) in fiscal 2008 and an increase of $1.46 in 2009 to $8.72 per MBTU.
"Each one cent increase in the price of natural gas adds $600,000 a year in state severance taxes," Albrecht said. "We could be seeing an additional $600 million in gas severance taxes over the next 14 months."
Higher energy prices also mean higher energy employment, Albrecht said, and higher corporate and personal income tax collections.
"We are experiencing income tax collections at a rate unheard of in our history," he said. "Our underlying economy continues to show strength."
Albrecht said more state income tax returns were filed this year than before the hurricanes of 2005.
"We have seen a growth in W-2 employment, as workers leave part-time jobs for full-time jobs," he said.
The board also voted to form a special committee to determine the effectiveness of the methods the state uses to predict energy prices.
"The only thing we know about the forecast for sure is that it is going to be wrong," said chairman James Richardson, an economics professor at Louisiana State University. "That is the nature of forecasts."