State Losing On Natural Gas Tax Exemption

NEW ORLEANS (AP) — Buried in a 1994 law is a tax exemption that, so far, has cost financially strapped Louisiana more than $220 million from the natural gas bounty of the Haynesville Shale formation in the northwestern parishes.

But as the state faces a $1.6 billion budget shortfall, legislative leaders say there is little chance of changing the severance tax exemption even it is costing the state millions of dollars in revenue from Haynesville production.

According to the state revenue department, the exemption cut gas severance taxes by $191.6 million in Louisiana's 2009-10 state fiscal year.

Industry analysts said Louisiana may be stuck with the exemption because to dump it could worsen an expected slowdown in gas activity or drive drillers to neighboring states.