Gov. Jeff Landry’s administration confidentially settled a major tax lawsuit with ConocoPhillips Corp. worth hundreds of millions of dollars. The settlement comes after the state Department of Revenue sued the oil giant last November, alleging that it underpaid its state income taxes by $390 million from 2008-11. The debt ballooned to more than $700 million when penalties and interest were taken into account. As Bloomberg Tax’s Michael J. Bologna explains, the Revenue Department refused to say whether Conoco paid anything as part of the settlement.
“The administration should explain to the public why it walked away from a potential $700 million lawsuit,” said Jan Moller, executive director of the nonpartisan fiscal policy think tank Invest in Louisiana. “This is money Louisiana desperately needs. If the state is going to ask ordinary citizens to pay taxes, then certainly the wealthiest corporations should also pay what they owe.” Steven Procopio, president of the Public Affairs Research Council of Louisiana, said the department should explain why it withdrew from the lawsuit, adding, “citizens will be left to speculate why potentially $390 million to $700 million was left on the table.”
Census failures in Lake Charles
The U.S. Census – a decennial effort to count every person living in America – plays a crucial role in determining state and congressional political boundaries and the allocation of trillions of dollars in federal funding. The Covid-19 pandemic and dueling hurricanes upended these efforts in Lake Charles during the last census count in 2020. Grist’s Zoya Teirstein explains the difficulties of tracking population-level impacts of natural disasters and its consequences:
The flow of people out of Lake Charles to other cities in Louisiana or Texas further deepened long-standing racial and economic divides, both at the parish and city levels. “The majority of homeowners were able to come back and rebuild,” said Mike Smith, a member of the Calcaiseu Parish Police Jury who represents District 2, encompassing north Lake Charles. But many renters didn’t come back — at least not immediately. And when they did, they couldn’t find places to live in their old neighborhoods. “Our biggest concern now is housing,” Smith said. Roughly half of the city’s residents lived in rented houses before the storm. The census didn’t capture these trends, and, in many cases, neither do the new district maps.
From 2019 through 20202, Lake Charles lost a higher share of its population – close to 7% – than any other U.S. city, and had one of the highest rates of incomplete census surveys.
New Mexico uses oil revenue to provide child care
Louisiana and New Mexico routinely rank as some of the worst states for child well-being, according to the annual KIDS COUNT Data Book produced by the Annie E. Casey Foundation. But the Land of Enchantment is working to reverse course. The state used $436 million in federal pandemic aid to greatly expand access to early child care. Voters then approved a ballot measure to sustain those improvements when federal dollars inevitably dried up. Now, New Mexico is providing free child care to most families by drawing on state trust funds made up primarily of oil and gas revenue. High Country News’ Susan Shain reports:
While the principal in both investment funds comes primarily from fossil fuels, as does roughly a third of the state’s recurring revenue, the accounts are insulated from that industry’s volatility. In boom years, the funds get padded; in bust years, they still generate a return on their investments. “It’s forward-looking in that it contemplates a future in which we won’t have as much oil and gas money as we do now,” Heinz said. In the meantime, high oil prices have helped the trust fund balloon from $300 million to more than $5.5 billion in just four years. Heinz acknowledged not every state has such resources, but added: “Lots of oil and gas states are not choosing to invest this money in children. That, I think, is important to highlight.”
States should bolster, not undermine, education gains
The historic federal aid that helped state and local school districts navigate pandemic-related education challenges expires at the end of September. State leaders should be examining ways to replace some of this revenue through progressive taxes and ensuring public tax dollars remain in public schools. But many states, including Louisiana, are going in the opposite direction by considering costly income tax cuts and private-school voucher programs that would exacerbate the loss of federal funding. The Center on Budget and Policy Priorities’ Joanna LeFebvre explains how states can bolster education funding:
The combination of these policies with the loss of ESSER funds will result in significant decreases in investments in schools. For example, Arkansas is pursuing all three of these policies and is facing an estimated 6.8 percent decrease in education funding because of ESSER’s expiration. The ESSER loss plus the revenue losses from Arkansas’ property tax cut, and personal and corporate income tax cuts, plus shifts in funding to private school vouchers result in a total loss of $1.86 billion for fiscal year 2025. That was the equivalent of about 30 percent of total spending on K-12 education in Arkansas during the 2021-2022 school year.
Number of the Day
38% – Percentage of U.S. children that lived in lower-income households in 2022. (Source: Pew Research Center)