As the oil and gas industry floundered over the last half-dozen years in the Gulf of Mexico, Iberia Parish government has had one steady revenue source — its ad valorem tax base.
But the long anticipated cracks in the aqueduct that carries that revenue stream are finally coming to light, according to Iberia Parish Assessor Taylor Barras.
According to preliminary estimates of the 2021 tax rolls, which closed last Friday, the parish will show a $40 million decrease in its overall assessed value, largely based on a reduction in inventory and equipment among offshore oil and gas service companies, Barras said.
“This is somewhat expected,” Barras said. “We could tell from reports at the beginning of the year that the inventory accounting was down. There’s also a lot of equipment that was moved out because it really wasn’t being rented.”
Most people realize that the assessor’s office deals with taxes on property, such as homes and commercial buildings. But a large part of the assessor’s job is to value and assess taxes on business inventory and equipment, like tractors, large pumps and boats that service the offshore industry, as well as industrial moules and heavy equipment for land-based uses.
The economic downturn in the oilfield, which took hold in the waning months of 2015, has seen oil prices drop from highs well over $100 a barrel to at first around $70, then $50, then below $40. The oil market hit its nadir last year when, for a trading day, the price per barrel on commodity markets was actually a negative number.
That is not the only issue facing local businesses, however.
“We also have had some supply chain issues,” Barras said.
The global shortage of computer chips, for example, has put a strain on automobile inventories at dealerships. It has also affected the heavy equipment industry, driving down the availability of tractors, dump trucks and other industrial vehicles.
“Those are by far the two largest categories,” Barras said, referring to the idled and disrupted inventory shortfalls. “We estimated that the drop was in the $40 million range as they (Iberia Parish Government) begin budget discussions. At five or six percent, it’s a small percentage.”
A one-year hit, which would make for a $750,000 decrease in the parish’s tax revenue for the year, is bearable in normal times. But this shortfall comes as officials are already eyeing further cuts to a bone-thin budget. And it may not be the last of it, Barras said.
“There could be more next year,” he said. “Be prepared for that. Hopefully we won’t see it.”
There were also some positives in the preliminary numbers, Barras said. The residential housing market values are holding strong, and the addition of new industries, like the Turner Industry footprint at the Port of Iberia and the pelletized fuel operation in Patoutville, will help to minimize the shortfall.
“I’m not sure we’ve turned that corner yet,” Barras said. “Fortunately, on the real estate side, the values have held.”