Unlike other states, Louisiana Parish Assessors do not have the full range of options available to them to accurately calculate ad valorem taxes on oil or gas wells. This has resulted in years and years of legal and financial disputes between assessors and industry.
As an example, just recently the Louisiana Supreme Court ruled on a well property tax dispute where an independent oil and gas operator purchased two gas wells and a salt water disposal well for a total of $100,000, but faced an assessment of over $3 million. This assessment resulted in the producer having to pay $110,000 in taxes, more than they paid for the property. They certainly paid their taxes under protest.
There are many many examples of wells that bring in very small revenues that must pay ad valorem taxes many times greater. This is certainly a disincentive to business in our state.
Fixing this hinges upon passing Constitutional Amendment 2. This amendment would enable assessors to use a fairer, more predictable, and accurate way to assess an oil or gas well. The Louisiana Assessors Association not only agree with this approach, they were integral to the process of developing this Constitutional Amendment.
Because industry and assessors were both at the table agreeing on the approach espoused in this amendment, it breezed through committee and through the floor in both the House and the Senate during the session. It was a simply matter of educating all my colleagues in the legislature that all parties affected, both in industry and at the assessors association, agreed that allowing the income method is a fairer way going forward to assess the value of a producing oil or gas well.
This is a narrow amendment that allows, but does not mandate, a fairer methodology for assessors. This is what most other producing states do. Failure to pass Amendment 2 would keep Louisiana in a difficult, if not impossible posture, ensuring continued troubles for parishes and operators.
It’s important to note that this amendment affects only the well operator, not the landowner, and does not create any new taxes or tax payers.
Please vote yes on Constitutional Amendment 2.
Rep. Mike Huval