- President Joe Biden’s executive order banning drilling on public lands could have far-reaching consequences for New Mexico’s crumbling education budget, Reuters reported.
- Around 40% of New Mexico’s state budget is funded by oil and natural gas revenues, according to the American Petroleum Institute.
- “The longer it goes… the more potential it has to impact New Mexico,” Stephanie Schardin Clarke, New Mexico’s secretary for taxation and revenue, told Reuters.
President Joe Biden’s executive order banning drilling on public lands could have far-reaching consequences for New Mexico’s crumbling education budget, Reuters reported.
New Mexico reportedly has the richest oil fields on federal land and largely depends upon oil revenues to fund its already struggling education budget, raising serious concerns from education leaders across New Mexico, Reuters reported.
“While you appreciate the green policies for environmental issues, you can’t strangulate the revenue streams in New Mexico,” Stan Rounds, executive director of the New Mexico Coalition of Educational Leaders, told Reuters. “So we’re very concerned.”
The state’s education budget receives 45% of state appropriations, signaling a possible budgetary crisis in the coming years as the Biden administration moves to transition the U.S. to green energy alternatives such as wind and solar, Reuters reported.
Around 40% of New Mexico’s state budget is funded by oil and natural gas revenues, according to the American Petroleum Institute.
Biden signed an executive order Jan. 22 placing a temporary 60-day restriction on new oil and gas leases on public lands and waters in an effort to undo the Trump administration’s policies on energy and climate change, the Daily Caller reported.
Although the moratorium on new permits is limited to 60-days, it could mark the beginning of a prolonged effort by the Biden administration to shift New Mexico’s economy to alternative energy sources, the Associated Press reported.
Biden pledged during the campaign to halt all new drilling on federal lands, and as president has re-entered the U.S. into the Paris Climate Accords, which former President Donald Trump left at the beginning of his administration.
Oil revenues from the Permian Basin alone reportedly account for one-tenth of the state’s budget, according to Reuters. The San Juan Basin is the one of the top sources for natural gas in the U.S., according to the U.S. Energy Information Administration.
More than two-thirds of land in New Mexico is owned by the federal government with the majority located in the oil-rich Permian Basin, making oil revenues an integral piece of the state’s economy, Reuters reported.
Republican Rep. Yvette Herrell of New Mexico tweeted Tuesday that Biden’s alternative energy plan is incapable of offering the same number of jobs as natural gas and oil.
— Rep. Yvette Herrell (@RepHerrell) February 9, 2021
The state could potentially lose up to $12 million in drilling revenue in 2021 due to cancelled federal lease sales, economists for New Mexico’s Legislative Finance Committee said, Reuters reported. If Biden’s ban remains in effect and zero new wells are brought online, production levels could fall more than 70% according to the committee.
“The longer it goes… the more potential it has to impact New Mexico,” Stephanie Schardin Clarke, New Mexico’s secretary for taxation and revenue, told Reuters.
The state’s drilling industry has surged in recent years, and some legislators have become worried about oil dependence, Reuters reported. To offset declining oil revenues, New Mexico is exploring alternative revenue streams such as a tax on groceries, adding personal income tax brackets and creating incentives for alternative energy.
On top of adding tax brackets, an increase in personal income tax for the state’s wealthiest residents is set to kick in this year, Reuters reported.
“Even our rosiest projections are not easily going to make up for the loss of oil and gas revenue,” Garcia Richard, New Mexico’s public lands commissioner, told Reuters.