Incumbent land commissioner threatens to hold NM’s largest industry “hostage” to get preferred policy outcome

The Rio Grande Foundation tends to not focus on New Mexico’s Land Commissioner very much. They have one primary job which is to keep the revenue from oil and gas on state lands flowing to beneficiaries including the poor-performing K-12 school system. Thus, our philosophy on Land Commissioner has been hands off as commissioners have usually adhered to a revenue maximization philosophy.

Until now.  According to the Albuquerque Journal, “Garcia Richard said she would support a temporary moratorium on fracking permits for the oil industry on state trust land as a way to force the Legislature to boost New Mexico royalty rates to match Texas’ rates, an idea that has stalled in recent sessions at the Roundhouse.” Notably, Texas has the highest royalty rates, so Garcia Richard is hoping to match the highest rate, not a middle-ground royalty rate at 25%. In New Mexico, the royalty rate for production on state lands is as high as 20% and royalties in the Permian Basin spanning Texas-New Mexico and North Dakota Bakken Basin range from 18–20% while many western states charge royalties of 16.67 percent.

New Mexico charges it’s high gross receipts taxes on equipment and production of oil and gas. There are numerous other fees and charges (by both states) that make direct comparisons difficult. But if Garcia Richard can make the case that tax burdens on oil and gas production are much lower than in Texas (and other states) and could be raised without doing great harm to the industry, that would be a worthwhile discussion. Holding the New Mexico Legislature “hostage” in an effort to force them to pass a bill desired by the Land Commissioner is a step too far.
Plugging New Mexico's oil and gas wells could create thousands of jobs
Print Friendly, PDF & Email

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.