Associate Press copy is provided via The Canadian Press
FILE – Pumpjacks work in a field near Lovington, N.M., on April 24, 2015. A windfall in government income from petroleum production is slowing down but far from over in New Mexico as the nation’s No. 2 oil production state grapples with how much it can effectively spend — and how to set aside billions of dollars for the future in case the world’s thirst for oil falters. The state is headed for a $3.5 billion general fund surplus for the year running through June 2025, according to a new forecast Monday, Dec. 11, 2023. (AP Photo/Charlie Riedel, File)
SANTA FE, N.M. (AP) — A windfall in government income from petroleum production is slowing down but far from over in New Mexico as the nation’s No. 2 oil production state grapples with how much it can effectively spend — and how to set aside billions of dollars for the future in case the world’s thirst for oil falters.
The state is headed for a $3.5 billion general fund surplus for the year running through June 2025, according to a new forecast Monday. New Mexico’s annual state government income has swelled by nearly 50% over the past three years, driven largely by oil an natural gas production in the Permian Basin, the most prolific shale-oil producing region in the country that extends across southeastern New Mexico and portions of western Texas.
The state will draw in a record-setting $13 billion — exceeding annual spending obligations by one-third, economists from four state agencies said in a presentation to a legislative panel. Monday’s forecast anticipates 2.2% growth in state government income, on top of 10.2% growth during the current budget year.
The estimate of government income sets a baseline for budget negotiations when the Democratic-led Legislature convenes in January, and could extend efforts to set aside money to ensure critical programs endure when oil income falters. The forecast cautions that slowing oil production and lower prices are expected to generate significantly less federal payments next year and beyond.
By the end of the decade, oil income is likely to begin a long, steady decline, “becoming a drag on revenue growth as global demand wanes,” the report states.
Permian Basin production and revenue would be lower in the future if countries “make good” on their promises as part of the Paris Agreement , said Daniel Raimi, a fellow at the Washington-based nonpartisan economics group Resources for the Future, which does not advocate on energy policies. In 2015, countries at the United Nations climate conference signed onto the agreement to limit the average warming across the globe to “well below” 2 degrees Celsius (3.6 F) and pursue efforts to cap warming to 1.5 degrees (2.7 F).
“It really hinges a lot on the different policies that governments around the world implement.”
About half of the New Mexico’s general fund revenue can be traced to the oil and natural gas sector through an array of taxes and royalties on petroleum production that takes place largely on public lands — and distributions that flow from the state’s $28 billion land grant permanent fund for education, which is nurtured by oil income and investment earnings.
New Mexico’s largest source of income is tethered to decisions across the globe about renewable energy production, adoption of electric vehicles, and new applications for nuclear power that could reduce fossil fuel use.
The state is looking for new revenue streams that shift the state’s dependence on oil, including Lujan Grisham’s proposal last week to help preserve freshwater aquifers with a $500 million initiative to underwrite the treatment of fracking wastewater. Early critics fear the plan might only spur more drilling for petroleum.
“We put a ton of money into funds,” New Mexico Gov. Michelle Lujan Grisham said from the United Nations climate conference in the United Arab Emirates, where calls to phase-out the use of fossil fuels have been on prominent display. “But you also have to create revenue streams that go into those funds that are reliable.”
Meanwhile, the growth in government income has allowed the state to expand agency budgets, scale back taxes, and offer new support to families, while bolstering spending on public education and colleges that account for roughly 58% of annual state general fund spending.
It’s more money in many instances than school districts and state agencies can effectively spend, as lawmakers push to bring average high school graduation rates and academic attainment up to national averages.
“All the resources have been there to pay the teachers more, to do the afterschool programing to provide the tutoring and support,” said Charles Sallee, director of the Legislature’s budget and accountability office, at a recent community presentation. “It’s the ability of the bureaucracy to organize and use those resources. In many cases it’s strained at capacity.”
Frustration boiled over at a recent legislative hearing that examined state spending on public education and stagnant average student performance at public schools.
Statewide, the share of students who can read at their grade level is 38%. Math proficiency is at 24%. The state’s high school graduation rate hovers at 76% — well below the national average of 87%.
Funding is increasing while the student population is declining, said Democratic state Sen. George Muñoz of Gallup, chairman of the lead state budget-writing committee at a November hearing.
“So we’re paying more for kids and we’re still not getting there,” Muñoz said. “What are we going to do to move the needle?”
New Mexico’s early childhood education trust, created in 2020, already holds roughly $6 billion. It’s designed to safeguard an ambitious expansion of public preschool, no-cost child care and home nurse visits for infants.
Last year, legislators agreed to set aside $150 million in a new land and water conservation fund and agreed to channeled more money from oil and natural gas into a savings account for construction projects — devoting $3 billion by 2027.
Legislators still are pushing to open new savings accounts. An emerging proposal would devote $100 million to a trust for Native American education including Indigenous language instruction among 23 tribal communities in New Mexico, including the Navajo Nation.
- 0072 Outlaw Buckers and Oil Kings 20240072 Outlaw Buckers and Oil Kings 2024
- 0069 Sask Oil Show 2024 banquet tickets0069 Sask Oil Show 2024 banquet tickets
- 0071 Pride Upkeep 2024 Packages0071 Pride Upkeep 2024 Packages
- 0070 Sask Oil Show 2024 pre-register0070 Sask Oil Show 2024 pre-register
- 0068 Sask Oil Show 2024 booth0068 Sask Oil Show 2024 booth
- 0067 PFM SaskWorks Payroll Investment Plan0067 PFM SaskWorks Payroll Investment Plan
- 0066 WBPC Promo video 30 seconds0066 WBPC Promo video 30 seconds
- 0065 Anova Resources field operator Oxbow0065 Anova Resources field operator Oxbow
- 0064 Estevan OTS0064 Estevan OTS
- 0063 Turnbull Excavating hiring crusher0063 Turnbull Excavating hiring crusher
- 0062 TED_EPAC_Technology_300062 TED_EPAC_Technology_30
- 0061 SIMSA 2024 For Sask Buy Sask0061 SIMSA 2024 For Sask Buy Sask
- 0060 Arizona Lithium Lease building0060 Arizona Lithium Lease building
- 0059 Southeast College Heavy Equipment Operator0059 Southeast College Heavy Equipment Operator
- 0058 Royal Helium Steveville opens anonymous rocket0058 Royal Helium Steveville opens anonymous rocket
- 0055 Smart Power Be Smart with your Power office0055 Smart Power Be Smart with your Power office
- 0053 Kingston Midstream Westspur Alameda Click Before You Dig large text0053 Kingston Midstream Westspur Alameda Click Before You Dig large text
- 0052 Predator Inspections0052 Predator Inspections
- 0051 JML Hiring Pumpjack assembly0051 JML Hiring Pumpjack assembly
- 0049 Scotsburn Dental soft guitar0049 Scotsburn Dental soft guitar
- 0046 City of Estevan This is Estevan0046 City of Estevan This is Estevan
- 0041 DEEP Since 2018 now we are going to build0041 DEEP Since 2018 now we are going to build
- 0032 IWS Summer hiring rock trailer music
- 0022 Grimes winter hiring
- 0021 OSY Rentals S8 Promo
- 0018 IWS Hiring Royal Summer
- 0015 Latus Viro0015 Latus Viro
- 0013 Panther Drilling PO ad 03 top drive rigs
- 0011
- 0006 JK Junior
- 0002 gilliss casing services0002 gilliss casing services
- 9002 Pipeline Online 30 sec EBEX9002 Pipeline Online 30 sec EBEX
- 9001