INSTITUTE INDEX: How drilling tax breaks worsened Louisiana's budget crisis

A special tax break for a type of oil and gas drilling is costing Louisiana billions in state revenue. (Photo of a gas drilling rig in Shreveport, Louisiana, by Daniel Foster via Flickr.)

Rank of oil-producing U.S. states among those under the greatest fiscal pressure because of plummeting oil prices, according to a new report from Standard & Poor's: 1

Price of a barrel of oil at its peak in 2008: $136

Price this week: $46

Budget deficit that oil-producing Louisiana was facing next year before a special session of the legislature adopted new taxes and spending cuts: $2 billion

Size of the anticipated budget deficit Louisiana still faces even after the special session and accounting for the financial boost from Gov. John Bel Edwards' decision to expand Medicaid: $600 million

Year in which Louisiana passed a law creating an exemption for severance taxes imposed when extracting oil and gas from horizontally drilled wells as an incentive to the industry: 1994

Number of years for which the law suspends the severance tax for these wells: 2

Number of years for which horizontal wells are most productive: 2

As a result of that severance tax suspension, amount in revenue Louisiana forfeited between fiscal years 2010 and 2014 alone: more than $1.1 billion

Number of top-producing oil and gas states besides Louisiana that allow suspension of severance taxes for horizontally drilled wells: 0

Despite Louisiana's legacy of energy production, total market value of the state trust fund financed by its severance taxes: $1.3 billion

Value of Alabama's trust fund financed through oil and gas production, even after a 2012 raid reduced the fund's value and earnings trajectory: $2.5 billion

Value of the severance tax fund in Texas, the nation's largest: $54.9 billion

Decade in which Texas experienced a deep economic downturn due to falling oil prices, after which it diversified its economy to be less reliant on the energy sector and to avoid the "resource curse" that plagues economies based on extractive industry: 1980s

Date on which the Brookings Institution released a report detailing ways that states can better manage severance tax funds to avoid the boom-and-bust cycles of extractive economies: 4/19/2016

(Click on figure to go to source.)