Trump proposes slashing Gulf royalty payments to Texas, other states

(AP Photo/Patrick Semansky)

President Donald Trump wants the federal government to stop sharing oil and gas royalties from the Gulf of Mexico with Texas and other states along the Gulf Coast.

In his budget proposal for 2018, the White House proposes eliminating a decade old program that was set to deliver up to $275 million to Texas, Louisiana, Alabama and Mississippi next year.

The funds are set aside under the law to protecting the Gulf coastline, with money directed to maintaining levees and other infrastructure, hurricane relief and preventing further erosion of wetlands that are fast disappearing along the Gulf Coast.

Elected officials along the Gulf Coast, along with an oil and gas trade association, quickly raised opposition.

“This budget robs Louisiana of financial resources promised to us for coastal restoration,” said Louisiana Governor John Bel Edwards.

“Eliminating Gulf state revenue sharing for offshore energy production would punish coastal states that support and host the development of home-grown energy and jobs,” said National Ocean Industries Association President Randall Luthi.

The White House estimated the move would save $3.6 billion over the next decade. But some officials expressed uncertainty whether eliminating royalty sharing would save the government as much as the White House claimed.

Texas was slated to receive up to $80 million of next year’s allocation, but an official from the Texas General Land Office, which administers the funds, said the agency is only budgeting to receive $12 million because of low oil prices.

Texas Land Commissioner George P. Bush held off sharp criticism, saying he was working with the White House on “a federal budget that is both lean and effective in protecting our national interests.”

“Commissioner Bush and his team have continued to communicate with the Trump Administration about coastal protection and erosion mitigation funding,” said Brittany Eck, spokeswoman for the Texas General Land Office.

The royalty sharing with Gulf States was established under the Gulf of Mexico Energy Security Act, passed in 2006 towards increasing oil and gas leasing in the Gulf of Mexico.

By eliminating the royalty sharing, the Trump administration estimates it would increase federal revenues by $3.6 billion over the next ten years.

It was part of a budget proposal that seeks to slash discretionary spending while lowering federal taxes, what White House Budget Director Mick Mulvaney described Monday, as a “taxpayer first budget.”

Within the administration increasing federal oil and gas royalties is viewed as a necessary tool towards creating a balanced budget over the next decade.

By opening up oil and gas drilling in the Arctic National Wildlife Refuge in northeastern Alaska the administration hopes to generate $1.8 billion over the next decade. Over the same period they hope to add another $16.6 billion in revenue by selling off oil from the Strategic Petroleum Reserve.

Also included were steep cuts at the Department of Energy’s research divisions, including work in developing new technologies in the fields of fossil and nuclear energies, as well as for the power grid.

The biggest cut would come at the department’s Office of Energy Efficiency and Renewable Energy, down 88 percent from last year’s request to $636 million.

“This budget delivers on the promise to reprioritize spending in order to carry out DOE’s core functions efficiently and effectively while also being fiscally responsible and respectful to the American taxpayer,” Energy Secretary Rick Perry said in a statement.