BATON ROUGE, La. (AP) — With oil prices plummeting and gas prices slipping below $3 per gallon, Jeff Downs’ fuel bills aren’t the heftiest toll on his budget anymore.
Downs, filling up an SUV at a local gas station Monday where regular unleaded fuel was selling for $2.99 per gallon, said he and his wife had been shelling out $650 per month to fill up their two vehicles, exceeding the costs of groceries and most everything else.
“At the highest peak, they were the highest bills in our house,” Downs, 29, said of his monthly gas bills. Thanks to the dip in fuel prices, “It’s saving us on average about $150 a month.”
While Downs and Louisiana drivers feel a bit of relief, Louisiana’s treasury gets pinched.
The plummet in oil prices is putting a screeching halt to the multimillion dollar surpluses the state has enjoyed in recent years and taking away the hope lawmakers had pegged to oil for weathering the national economic crisis.
Louisiana receives severance taxes and royalties for oil and gas production on its land and in its waters. For each $1 per barrel oil price each year, the state’s coffers get about $12 million, said Greg Albrecht, the chief economist for the Legislative Fiscal Office.
Projecting the right oil price isn’t the problem. The state has been conservative with its estimates, with an oil price of $84.23 per barrel for the current fiscal year that started July 1 and $72.17 per barrel next year.
With oil prices topping $140 per barrel earlier this budget year and dipping below $70 now, the state’s current year forecast is expected to hit nearly the right mark — and budget analysts said next year’s forecast should be about right as well.
Albrecht said oil prices weren’t sustainable at their highest levels, and the state’s economists had long predicted that hefty gas prices would push people to drive less, helping to bring those prices back down.
The problem is that the other sources of state revenue, like income and sales taxes, are flat or have fallen, at least partially tied to the national economic downturn.
“Our state economists have recently reported for the first time in five years that corporate income tax has declined and that for the first time in 20 years that personal income tax has declined,” said Commissioner of Administration Angele Davis, Gov. Bobby Jindal’s top budget adviser.
Where the skyrocketing price of oil once would have filled any gaps, the mineral resource now can’t be the state’s saving grace.
“The recent history has been giant surpluses, surprise revenues going up and being used, and still ending up with a billion dollar surplus. That’s over with,” Albrecht said.
At one point, the state had so much money sitting in the treasury that it was earning millions of dollars extra each year in interest, further boosting the surpluses.
The state has had at least four years in a row of surpluses totaling several hundred million dollars and, in one case, more than a billion dollars. The money has been poured into road work, coastal restoration, construction projects, ports and more.
One more surplus awaits spending, $865 million left over from last year, nearly all from hefty oil and gas prices.
But next year, with oil prices plummeting, the state’s budget is estimated to be as much as $1.3 billion short of the money needed to continue all the services the state provides today.
“We’re going to have to be more efficient in government,” Jindal said. “We’re going to be scrubbing every budget, every line of every budget.”
The governor said his agency chiefs have been told that at best, they’ll get a standstill budget for next year. At worst, they’ll face reductions.
Ashley Biagas, a 25-year-old Southern University nursing student, said the dip in gas costs brought on by the slip in oil prices will help a bit with her personal budget, but just a bit. Laid off a few weeks ago, she’s still looking for work.
Even with gas below $3 per gallon, “I’ve been applying online instead of going to different places,” Biagas said Monday, as she filled up her car’s tank.
 
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