Energy-rich Louisiana feels pinch of recession
Baton Rouge, La.
Even energy-rich states are finding it hard to hold onto their 1970 gains in the recessionary 1980s, says Louisiana Gov. David Treen.Skip to next paragraph
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And because President Reagan's New Federalism means that states ''won't have the magnitude of resources that we would otherwise have,'' governors like Mr. Treen, a Republican, must make some hard choices to offset dwindling federal support.
Based on his conviction that a conservative should ''avoid borrowing, try to stay out of debt, pay as you go,'' Governor Treen is pushing to raise new taxes in his state. This unpopular choice is unavoidable, Treen says, because ''it is a national imperative that we balance the federal budget. I think we have to yield our parochial interests somewhat in order to accomplish national objectives.''
Outlining Louisiana's present economic problems and its future in an interview with the Monitor, Treen says that frost-belt states shouldn't expect a federal bail-out that draws from taxes on Sunbelt wealth. Instead, he advises all states to draw more on their own resources and accept more responsibility for their own welfare.
''In the past the South has . . . gained through the federal government playing a role in the redistribution of resources,'' Treen admits. But, he adds , ''as we become more productive in the South and as the problems of East and West develop and to the extent there is a national program to finance these things, the South is going to come out on the short end.'' With this prospect in sight, he says, the South will opt for New Federalism. This will mean new state taxes, Treen explains, but will also mean that the South avoids paying into US coffers to prop up frost-belt states.
Powered by rapidly escalating oil prices, Louisiana jumped from ranking 45th among the 50 states in per capita income for 1975 to 35th place for 1980. But 1982's oil glut has stalled this dramatic rate of climb. The result is that business and political leaders are searching hard for ways to ride out the recession and lay foundations for future growth.
When times were good, just six months ago, auto and steel workers streaming down from the North found plenty of work in southern Louisiana. Now these newcomers are stretching out unemployment lines rather than stringing new oil and gas pipelines. This switch reminds people that northern Louisiana towns, which led an earlier oil boom in the 1930s, are ''dirt poor'' today because their oil ran out and left nothing solid behind.
The lesson, Louisianans explain, is simply that oil is a risky business, far too risky for a state to rely on oil alone - and far too risky for energy-short states to rely on for help from their energy-producing relatives.
Louisiana remains proud of leading the nation in natural gas production and in coming behind only Texas and Alaska in crude oil production. But times are changing, with even oil industry spokesmen warning that Louisiana must build up its neglected manufacturing base to prevent overdependence on oil.
Treen was elected in 1979 with the oil industry's full support. Both in Congress from 1973 to 1980 and now as governor, New Orleans lawyer Treen has been considered ''friendly'' to the oil industry.
So it surprises the oil industry to find Treen pushing hard to squeeze more taxes out of oil and natural gas production. From the oilmen's perspective, their industry already pays its fair share to the state. They find it contradictory for a conservative Republican to boost taxes. More taxes, they argue, will cost jobs both through closing down plants already here and through discouraging new investment in the state.
Governor Treen admits that his insistence on new taxes is ''alienating some people.'' But, he adds, ''The plain fact is that we have some heavy capital needs in our state.''
Treen has proposed a Coastal Wetlands Environmental Levy (CWEL). By taxing petroleum products transported through the state's fragile coastal wetlands, CWEL would raise an initial $450 million per year from offshore oil and gas produced in the federal zone outside Louisiana's three-mile coastal waters - and outside the state's tax net. CWEL was voted down in the state legislature earlier this year. But Treen may call a special legislative session in November to turn CWEL into law.
Perhaps more than the tax, the oil industry is bothered by Treen's contention that oil production harms as well as helps the state.
Treen says Louisiana needs to prepare for a future without oil. ''Oil and gas are finite resources and we should utilize the revenues from these resources to build our infrastructure in Louisiana to attract investment in our state and build up our economy,'' he says.
Treen wants new highways, bridges, and a better educational system. He favors tax exemptions to attract investment to high unemployment areas. Paying for such steps toward a more diversified Louisiana economy ''by applying new taxes to our natural resources,'' Treen explains, ''is a legitimate way.''