Still no reason to raise royalty rates in NM (SB 23)

SB 23 which would allow for increased royalties (a form of tax specific to oil and gas) on lands managed by the State Land Office. The bill is up in Senate Conservation Committee Tuesday morning. Click on the link to the Committee page and send the committee staffer an email in order to testify.

Land Commissioner Stephanie Garcia Richard, a Democrat, has been waging a years-long campaign to force the Legislature to increase the percentage oil and gas companies must pay to her office. So far, the Democrat-controlled Legislature has refused, but the issue has come up once again in 2025. Garcia Richard believes that New Mexico should charge royalty rates comparable to those charged in Texas.

But, comparing royalty rates of Texas to New Mexico is not straightforward:

While NM state royalty rates range from 12.5% to 20.0% (and Texas sits at 25% for their state lands), New Mexico carries THE highest overall tax burdens on oil and gas production when compared to Texas, and all other states.

A recent study by the NM Tax Research Institute found “New Mexico has the greatest percentage share of total oil and natural gas production value directly contributed to government revenue  when compared with the rest of the states in this analysis. This result occurs because New Mexico taxes oil and natural gas production at rates comparable to the highest rates of taxation compared with [eight other oil & gas producing states.]”

Regardless of rates, RGF would only note that New Mexico is sitting on $58 billion from the oil and gas industry. Sadly, existing revenue from the ongoing boom is currently NOT being used to benefit New Mexicans. There is NO reason to raise royalty rates when New Mexicans are experiencing so few benefits from existing oil and gas royalties.