The people of Plaquemines Parish are experienced in surviving disasters, from floods to hurricanes, but now this community is facing one of the biggest threats yet: the collapsing oil market.
The parish’s budget is tied to the price of oil because the parish is in the oil business. It owns about 100,000 acres of land in the Gulf of Mexico that it leases out to oil companies, which pay to drill there.
Last year, the parish hired its usual consultants and the finance office worked up estimates for this year’s budget accounting for the price of oil. A barrel of oil then was $59. Now it’s just $30. Because of the coronavirus’ impact on oil prices, the parish faces a $7.5 million budget shortfall, forcing lawmakers to consider whether to raise taxes, lay off staff, cut services, or all of the above.
At a recent parish council meeting, held on Zoom, finance manager Tommy Serpas proposed taking out bonds to cover the difference and keep the government operating.
“When we run out of money in August or September, how are we going to pay the bills? I mean, everything will have to stop. We won’t be able to pay anything,” he said, sounding exasperated.
Councilmember Trudy Newberry agreed: “This pandemic is an eye-opener. We need to get off our butts and we need to do something!”
Plaquemines stretches out on either side of the Mississippi River from Belle Chasse to the mouth of the river about 70 miles south. Dotted with refineries, shipyards and ports, it’s an area that’s changed a lot over the years — not only is there less of it, but there are fewer people, too. Named after the Native American word for persimmon — piakimin — the parish was once home to citrus groves that were the basis of a major industry. Though many have been wiped out by repeated storms, the parish still holds an annual Orange Festival every December at historic Fort Jackson, near Buras.
But now it’s something else entirely.
Oil money and shipping built this parish. When the prices were high, life was good. Parish President Kirk Lepine said that’s just not the case anymore.
“We put all our eggs in one basket. And now it's here. It's reality,” he said.
The losses have created a long-term budget gap, and Lepine has been forced to make a list of non-essential departments to cut and employees to lay off.
“It's not fun,” said Lepine, who was born and raised in Plaquemines and was a councilmember for eight years before being elected president. He’s now in his second term.
Lepine is not ready to specify which services could be cut, partly because he’s going to float a few proposals past the council first. There might be ways to raise certain taxes and fees in order to avoid laying off upwards of half of the 500 parish employees, which is what the finance department said would be necessary if no additional revenue is added.
It’s not the first time Plaquemines has been in this predicament. During the oil downturn in 2015, they downsized parish government by nearly half, cutting 300 of their 800 staff members. They had to institute a hiring freeze and start taking out loans to support their budget.
Councilman Richie Blink said he always thought “it would be a hurricane that would get us, not a virus and the ensuing economic hard times that would follow.”
Blink lives in a trailer house in Empire, near where we grew up. It’s almost as far south as you can get in Louisiana. The levees rise high on either side of Highway 23, with the Mississippi lapping at the banks to the east and the eroding marsh of Bay Vacherie to the west. Blink’s trailer home is an oasis of citrus trees and flowers. He makes his living taking people on swamp tours. In his free time he plants trees to prevent the marshes from eroding. A few years ago he decided to channel that passion and run for office.
He said the council is going to be forced to increase taxes and add fees, and that’s going to be hard on the people who live there, many of whom aren’t well off. He is frustrated with past leaders and said pegging the budget to the price of oil was “the equivalent of being almost irresponsible with a trust fund. Eventually, one day, that oil was going to run out.”
The parish offers a lot of other services for its residents, including the ferry, subsidized slips at shipyards, mosquito control, firefighters and recreational programming for kids. And the money for all those services comes from that oil-rich budget. It has the fourth-lowest tax rate in the state.
Mark Davis, director of Tulane's Center for Environmental Law, co-authored a paper that looked into these types of tipping points for coastal parishes and said the loss of basic services like water can spell the end for communities. It becomes too expensive to live.
“What we've really been seeing is a trend towards the cost of living, working and governing in coastal parishes going up, yet the ability of local governments and the state to meet those demands has been going down,” Davis said.
Plaquemines isn’t alone.
All of the coastal parishes rely on oil and gas revenue, to an extent, and the economy is shifting. Oil and gas has shifted offshore from parish-owned land, meaning parishes are collecting less of the revenue from the sale of leases. Fishing, another big economic driver, has become less profitable because of cheap imports from other countries.
“The future of our coastal communities is increasingly determined by who believes that you are insurable? Who believes that you'll be able to pay back bonds?” Davis asked.
Plaquemines officials are hedging its bets that it’ll be able to earn that trust and take out more loans. The parish is already $150 million in debt.
Plaquemines and other coastal parishes are also turning to natural gas and hoping it will keep them afloat. Venture Global Plaquemines LNG is building an $8 billion liquified natural gas terminal, expected to be up and running by 2023.
That could mean Plaquemines will become just one more industrial area, a place to commute to for work, rather than a place to raise honeybees, orange groves, or families.
“I don't think these parishes are done for,” Davis said, “but they're not going to look the way they look now.”
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