Wednesday, March 14, 2012

Just One More Boom? Please?

DeSoto Parish made the Wall Street Journal today with an article about the decline in tax revenues seen by the parish now that drilling in the Haynesville Shale has declined substantially from highs two years ago.  The article offers the cautionary tale of the boom and bust nature of oil and gas drilling and points out some of the spending projects in DeSoto over the past several years, including recreational facilities and bonuses for some civic workers.

I am old enough to remember the bumper stickers in Louisiana during the 1980's that said (paraphrasing), "God, just give us one more boom, I won't piss it away this time." It is almost impossible to avoid pain when dealing with a boom-bust industry because you have to expand to serve the quickly growing market, but when it contracts, so do you. I guess the hardest part of a boom is calling the bust in time to get out of the way.

While it is tempting to suggest that boom-generated money should be saved, I'd argue that it should be invested. In these times where people are running around saying that government can't be trusted with money, the parish leaders had almost no choice but to spend!

From my vantage point, it seems they spent on one-time infrastructure improvements and bonus payments to workers.  I'm not familiar with the inner workings of DeSoto, but wasteful spending would have been big pay raises (obligating the parish for higher salaries once the boom times end) or luxurious buildings and facilities that require lots of future upkeep.

One thing that the article didn't mention - and I have not independently verified the extent of this - is that the parish school board is one of the biggest landowners in the parish and therefore received substantial lease bonuses and stands to receive significant royalty payments going forward.  Beyond the short-term spike in sales tax and property tax receipts, this could be the best legacy of the Haynesville Shale in DeSoto.  Creating a top notch school district with significant resources is a once in a lifetime opportunity for future generations of children in the region.  If city fathers want to truly elevate DeSoto Parish, they should make education the crown jewel.  THAT is the investment opportunity that should not be squandered.  They may not have the cash in the bank to do it today, but when gas prices turn and drilling returns, it should be the highest priority.


Anonymous said...

I think that the article put a bit of an unfair spin in that they did not publish figures on how much has been put away by the school system (alot). I believe that the school leadership has done good job of not getting intoxicated by the jump in revenue. They gave bonuses, very nice bonuses, but how can you collect that kind of revenue and not? Sure there are some debatable purchases like the turf, but overall I was impressed with the wisdom of the decisions that were made. Now I dont think some of the other parish bodies were quite as wise, but the schools were.

They do hold a large amount of property, even an entire section in one parcel. I dont have any information on terms of lease or if it was leased at all.

Robert Hutchinson said...

I think the school board was lumped in with the parish as a single unit, when in fact they are dealing with different pools of money.

And honestly I'm not down on the turf field (assuming it is not just old astroturf). "Big time" items like that have a positive psychic impact on the population. Obviously, there is a limit, but we all need some frills in our lives.

Anonymous said...

The turf is top notch! It was one of just a few in the country at the time constructed with this new type of turf.