Natural-Gas Prices Inflate State Coffers
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High Prices for Natural Gas Inflate Some States' Coffers; Oklahoma in Biggest Boom in 25 Years
Saturday August 19 ; By Shaun Schafer
ELK CITY, Okla. (AP) -- Suzy Spieker's telephone rings as many as 10 times a day with calls from people wanting to move to the Oklahoma frontier to get in on the money. Want a rental? Join the list, the Elk City real estate agent tells them. Want to buy? Her book of three-bedroom home listings has been whittled to a single page by an influx of oil and gas field workers.
"One sheet -- not even a full page," she marvels. "It used to be four, five, six sheets."
A flurry of home building, packed hotels, the new cars and trucks cruising the red dirt oil patch along the Texas border 110 miles west of Oklahoma City announce a natural gas boom that hasn't been seen here since the collapse of the last boom nearly 25 years ago.
The prosperity has boosted tax revenues and created jobs. High prices and high demand have filled the state's coffers just three years after the worst budget shortfall ever.
Tax collections on oil and gas production that bottomed out at $249 million in 1999 were at $1.2 billion through the first six months of this year. State leaders have used the revenue windfall to cut taxes by $627 million, while approving record spending for education and roads. Every Oklahoma public school teacher has been given a $3,000-a-year raise.
Oklahoma is one of a handful of major energy-producing states that have seen severance tax collection rise sharply on higher energy prices. In Texas, natural gas tax revenues zoomed from $628 million in 2002 to $1.7 billion in the past year, the biggest growth area in tax collection in the state.
Thirty-nine states collect a tax when natural resources -- oil, coal and natural gas -- are "severed" from the land. States also receive a share of mineral revenue from leases on federal lands and federal offshore oil and gas tracts. Combined, those leases brought states $1.7 billion in most recent fiscal year, according to the Minerals Management Service.
Currently, natural gas prospects are so good, "boom" doesn't accurately describe them, said Tom Price, Chesapeake Energy Corp.'s senior vice president of corporate development.
The fast-growing economies of China and India and their 2 billion residents are likely to mean more worldwide demand, said Price.
"When 2 billion people all decide they want to have automobiles rather than ride bicycles," he said, "that has a pronounced impact on the demand for energy."
Even in states that benefit from high energy prices, there is a recognition of the limits. In December, the governor of Colorado asked that $20 million in severance tax revenue be earmarked for the state's low income energy assistance program.
City leaders in Elk City are treading cautiously as well, even as the cash pours in.
Sales tax revenues have been growing 10 to 20 percent each month over the same time last year, said city manager Guy Hylton. The money has helped pay for new baseball and softball complexes, a high school auditorium and gymnasium and the replacement of aging maintenance vehicles.
But Hylton said the city only spends what it has, as a safeguard and in light of lessons learned from the last bust.
"The people that survived the last time were the ones that paid as they went," he said.
When the high-rolling days of the 1980s ended, builder Bill Johns had 20 homes under construction in Elk City. He was forced into bankruptcy.
"When it busted, it busted. I couldn't sell a house for $2," said Johns.
He bought property in Elk City upon his recent return but has decided not to develop it for now. |
