There might be some semblance of bi-partisan common sense at the Roundhouse this legislative session after all.
On Friday, three Democrats in the House Commerce and Economic Development Committee joined the committee’s Republicans in voting to table that would raise the state land oil and gas royalty rates, effectively killing it for this session.
The Santa Fe New Mexican reported:
Sponsored by Rep. Derrick Lente, D-Sandia Pueblo, HB 398 would have allowed for royalty rates of up to 25 percent, the same level as neighboring Texas, with which New Mexico shares the resource-rich Permian Basin.
The cap for royalties the New Mexico land commissioner can charge is currently set at 20%, but unlike Texas where most oil and gas development takes place on private land, a significant portion in New Mexico happens on state land.
New State Land Commissioner Stephanie Garcia Richard said the bill is necessary to get more money for New Mexico school children. About 85% of the revenue generated from state lands goes to the state’s public education budget, which in fiscal year 2017 totaled $723 million.
However, an effective 20% tax increase could drive production from state land to adjoining federal land, or even to Texas, in which case New Mexico schoolchildren would receive no benefits at all. Even so, the bill was one Garcia Richard’s top priorities. Thankfully, a bi-partisan coalition of legislators recognized this economic reality.
A new video released ahead of the vote by New Mexicans for Economic Prosperity (NM4EP), a statewide economic coalition of which the Rio Grande Foundation is a member, explains how New Mexico already benefits greatly from oil and gas development on state land.
If New Mexico politicians want to look to Texas that would actually help emulate The Lone Star State’s economic success, we recommend: eliminating the income and corporate taxes, adopting a “right to work” law, and repealing the expansion of Medicaid.
The Democrats who voted against the bill to raise royalty rates were Representatives Jim Trujillo of Santa Fe, Patricio Ruiloba of Albuquerque, and Moe Maestas, who chairs the committee. The Republicans Representatives were Alonzo Baldonado of Los Lunas, Rebecca Dow of T or C, Kelly Fajardo of Los Lunas, and Jane Powdrell-Culbert of Corrales.
A similar measure (SB 500) introduced by Senator Bill O’Neill (D-Albuquerque) has been referred to the Senate Conservation Committee but has not been scheduled for a hearing. If O’Neill’s bill does receive a hearing, hopefully the senators on that committee have the same foresight as their colleagues in the House.