OSV owners and operators stand to lose tax refund dollars during the next year if a proposal from Louisiana’s new governor becomes a reality. Freshly minted Gov. John Bel Edwards appeared at the Offshore Marine Service Association meeting yesterday in New Orleans to plead his case.
“This is the worst fiscal crisis in the history of the state,” said Edwards. “The budget is not going to be pretty. We can’t pretend that there is revenue there when there isn’t.” The state has a $750 million shortfall that will balloon to $1.9 billion July 1.
The current Louisiana law allows a refundable credit for 100% of the ad valorem taxes paid on vessels operating on the Outer Continental Shelf. Edwards wants to suspend the refundable ad valorem tax credits for OSVs for a year and then adjust the refundable rate to 80% beginning in 2017. “This is not the way I wanted to start,” Edwards said. “There has to be some level of shared sacrifice.”
Edwards acknowledged the importance of the offshore service vessel industry to the state and that this “sacrifice” comes at a time when companies are hurting from the low price of oil. He said he wants to work with the OMSA membership and is willing to listen if someone has a better plan. “Let’s get a handle on this,” he said. “I’m going to work with you in good faith.”
Edwards also said that he knows the importance of a good labor pool for the offshore industry. “We’re going to have to make sure you have the employees you need,” he said. “We need to invest in education. We’ve got to get into the high schools. This industry is too important to just leave it to on-the-job training.”
Meanwhile, the Jones Act is under attack from a number of different fronts. Those who oppose the law are not taking a break because the price of oil is in the toilet. So, OMSA members have to fund lobbying efforts to combat that threat. “We need your help,” Sarah Branch, OMSA’s director of government relations, told those in attendance.
