Louisiana tax cuts to blame, too, sadly.

[barbaraann]

2005 Legislative Session Means Business
Tax Cuts Enacted and Job Creation Bills Passed

On July 1, Governor Kathleen Babineaux Blanco signed eight economic development bills that will further strengthen the state’s business expansion and job creation efforts. Since the beginning of 2005, the Governor has also led the phase out of two onerous business taxes.

Among the pro-business actions taken in 2005:

Louisiana has abolished $42.5 million in business taxes as part of a seven-year, billion-dollar action -- including the elimination of $22.5 million in taxes on corporate franchise debt and $20 million in sales taxes on machinery and equipment used in manufacturing.

Tax cuts and tax credits passed in the recent legislative session will spur the creation of even more jobs in Louisiana. These bills, all part of the Governor’s agenda for the 2005 session, will mean that Louisiana is open for business and ready to be a partner in making business thrive and prosper.

For a summary of all of the economic development bills and links to their text, click here .

http://www.lded.state.la.us/TempHomepage/2005LegislativeSessionMeansBusiness.htm

More:
Louisiana Tax Incentives

Louisiana is no stranger to oil and gas tax incentives. The Louisiana Economic Acceleration Plan (LEAP) and the Severance Tax Exemption Plan (STEP) royalty and severance tax exemption programs, enacted in 1986 were two major pieces of legislation to stimulate drilling.

LEAP exempted severance tax on oil and gas produced from wildcat wells completed between July 1, 1986 and January 1, 1990. The exemption was to expire on January 1, 1990, or when the posted field price of West Texas Intermediate equalled or exceeded $29.50/bbl.

Additionally, royalty payments for natural gas wells drilled on State leases were forgiven under the same qualifying requirements as the severance tax exemption. (ref. R.S.47:648 through 652)

STEP exempted severance tax on the first 50 barrels of oil produced per day, up to a maximum of 10,000 barrels a year, from wells drilled between July 15, 1986 and July 15, 1987, but did not appply to any taxable period during which the price of oil exceeded $21.00/bbl. R.S. 47:648.11 was amended in 1987 to extend the qualifying drilling period to July 15, 1988. The STEP exemption expired on July 15, 1990, and was not extended. (ref. R.S.47:648.11)

http://www.dnr.state.la.us/SEC/EXECDIV/TECHASMT/data/oil_gas/drilling_incentives_1991/drill-02.htm

Earlier, LA tried to tax offshore/overseas oil and gas production transported through the state but was blocked by the US Supreme Court:
In this context, it is instructive to recall the way in which the US Supreme Court struck down Louisiana's attempt to impose a "first use" tax on OCS gas landed in the state and then shipped to out-of-state customers (Maryland v. Louisiana, 1981)
http://www.oxfordenergy.org/comment.php?0304


It seems to me that if Louisiana were able to tax oil and gas produced offshore or overseas but transported through the state, it would have been able to finance much if not all of the needed levee repairs and some of the toxic cleanup from Katrina on its own. I'm sorry I don't have the time to do in-depth research into this issue but perhaps someone else is knowledgeable enough to correct me if I am wrong or provide further understanding of the situation.