New Mexico reports more than $2B in revenue for the third year in a row

Danielle Prokop, Source New Mexico

This article was originally published by Source New Mexico.

SANTA FE - Oil and gas revenue earned New Mexico more than $2.5 billion last fiscal year, state officials announced Thursday. It was the third straight year the state broke the $2 billion threshold from its land, and its second-biggest windfall of that type ever.

With record production, New Mexico has risen to become the second-highest producer of oil and gas in the U.S., just behind Texas. The state’s revenue from its 9 million acres of land and 13 million acres of below-ground holdings goes to its Land Grant Permanent Fund. The fund holds money in trust for public schools, universities and a handful of other beneficiaries. This year, it paid out more than $1 billion.

Nonpartisan analysts from the Legislative Finance Committee warned lawmakers earlier this year that the state is becoming increasingly reliant on the money generated by unparalleled oil and gas production, but that it is unrealistic to expect it to continue. Projections are showing that revenues are still growing, but slowing.

New Mexico land uses beyond oil and gas — think everything from grazing fees to leases for businesses like Netflix’s studios — made more than $214 million in revenues from the state, the highest amount ever, according to the State Land Office. That money flows into the separate Land Maintenance Fund, a catch-all fund which first pays for the State Land Office expenses, and then can generate revenue.

In years past, it typically amounted to just over 2.5% of the revenue, this year, it was more than 8%.

State Land Commissioner Stephanie Garcia Richard credited the growth to seeking more diverse opportunities, such as leasing lands for renewable energy. But she predicted the state will need to address some budget gaps in the 2025 legislative session.

“I will continue working to make as much money for our schools as possible, including pushing the Legislature to raise the state’s inadequate oil and gas royalty rate,” Garcia Richard said in a statement.

Even as the oil boom is boosting New Mexico budgets — quadrupling revenues in five years — the state is also increasingly paying more for impacts of manmade climate change linked to fossil fuels such as damaging wildfires, increased flooding and continued drought.

While it’s hard to always track how much disasters cost, the state approved loans of $46 million for the Hermit’s Peak-Calf Canyon Fires and more than $100 million in relief for fires and floods in Ruidoso earlier this year. Federal data tracking billion-dollar disaster events show New Mexico is suffering from hundreds of millions to billions in damages from storms, drought and fires.

Both the executive branch and the legislative finance committee will release their budget requests in the coming weeks.

Danielle Prokop covers the environment and local government in Southern New Mexico for Source New Mexico.