Severance tax, broadband bills advance

A Louisiana House of Representatives committee on Monday advanced a measure meant to let electricity cooperatives provide high-speed internet service, overriding the objections of a co-op lobbyist.
Also on Monday, the House Appropriations Committee advanced House Bill 506, which would reduce the state’s oil severance tax from 12.5% to 8.5% over several years. The rate would drop to 2% when the price of oil is less than $30 a barrel.
On rural broadband, Senate Bill 406 by Sen. Beth Mizell, a Franklinton Republican, would let member-owned electricity co-ops partner with internet providers in areas where broadband is not already available, which Mizell said is about 40 percent of the state. Co-ops could let affiliates use their electricity infrastructure and issue debt on behalf of the affiliate.
Companies are hesitant to serve areas where there aren’t enough people to justify the investment. The Federal Communications Comm-ission has established the Rural Digital Oppor-tunity Fund to distribute $20.4 billion over 10 years to places with limited or no broadband access, and state officials hope to bring some of that money to Louisiana.
Jeff Arnold, a former state legislator who is now CEO of the Association of Louisiana Electric Cooperatives, objected to language in the bill stating co-ops could only provide broadband in unserved areas. He said the provision would limit competition and was unnecessary to attract the federal funding.
House Commerce Committee members asked why the provision matters, since co-ops aren’t offering broadband internet service now. Arnold said at least one of his association’s members is looking to get into that business but won’t be able to under the bill’s restriction.
The severance tax change would lead to a $112.6 million reduction in tax collections over five years, the Legislative Fiscal Office estimates. Rep. Phillip DeVillier, the Eunice Republican who authored the bill, said it could lead to collecting more in taxes by giving the industry an incentive to invest in the state, though Department of Revenue Secretary Kimberly Robinson called that claim “highly speculative.”
DeVillier said production has been falling for 20 years, and the current supply glut and low demand could lead companies to shut down wells.
“Once those wells are shut in,” he said, “you’re going to see continued reduction in production. When you do that, these companies are leaving.”
The committee amended the bill to say the provision that could drop rates to 2 percent would not apply during next fiscal year. Lawmakers made the change in hopes of addressing concerns of local governments, which receive a portion of the money.