Louisiana Economic Impact Model
The Louisiana Economic Impact Model (LEIM) is a Leontief style input output model customized for the Louisiana economy. Special attention is given to the geographic distribution of economic impacts and tax impacts.
About LEIM
LEIM is based on the Regional Input-Output Modeling System (RIMS II) that is constructed by the U.S. Bureau of Economic Analysis (BEA). LEIM adds functionality along a number of dimensions compared to acquiring RIMS II from BEA. First, LEIM estimates the share of in-state expenditures. Second, LEIM allocates economic impacts across parishes of the state using gravity models of trade. Thus, LEIM produces parish specific estimates of economic activity supported by an initial shock, regardless of the location of the project of interest. This feature is particularly helpful for economic developers interested in their specific region. Parishes further away from the initial shock, and parishes with smaller industry specific employment will be assigned less economic activity. Finally, LEIM considers Louisiana tax structure explicitly in provided estimated tax revenues supported by an economic shock. Local tax impacts are based on specific information about property and sales tax down to an individual parish; a level of granularity not available in any commercial models for which we are aware. LEIM also includes a module to estimate direct property taxes, taking into account Louisiana's Industrial Tax Exemption Program (ITEP), for a new investment.
In 2022, LEIM was designated as the intellectual property of Louisiana State University, which allows for the licensing of LEIM for commercial use. Revenues from LEIM support maintaining and improving the model.
Alternative Recommendations
- Establish a volumetric tax rate for oil with the rate to be established semi-annually;
- Remove the verbiage “posted field price” from R.S. 47:633 (7);
- Review and simplify the calculation of the volumetric rate for natural gas and establish
the rate
semi-annually; - Remove exemptions associated with horizontal drilling, tertiary wells, and deep wells while maintaining revenue neutrality with respect to current severance tax projections.
View or download the report here.
Feedback from Industry
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