Millions of New Mexicans rely every day on critical public services, from schools and roads to health care and emergency services. Many of these services are funded through New Mexico’s General Fund, which in Fiscal Year 2017 took in revenues of just over $6.4 billion. Keeping these important services funded is a priority for our state, which means we need to encourage new economic activity and investment to generate the necessary tax revenue.
The best way to ensure adequate funding is with a growing and diverse tax base. We should support new industries investing in New Mexico, and we should encourage companies already here to grow their operations – be it in health care, recreation, energy, transportation, or any other sector. A broader tax base can also help insulate the state from financial hardship if one sector experiences a downturn.
Oil and gas development is one of the largest sources of tax revenue in New Mexico. According to the state, energy revenues (such as severance taxes) account for about 15 percent of the General Fund, but companies also pay income taxes, rents, and many other taxes and fees. All told, approximately 30 percent of all revenue that flows into the New Mexico General Fund is attributable to oil and gas development.
According to the New Mexico Oil and Gas Association, the oil and gas industry generated $1.7 billion in state tax revenue in Fiscal Year 2017. In January 2018, the New Mexico Legislative Finance Office reported that oil and gas revenues from severance taxes, rents, and royalties had increased by 34.4 percent year-to-date.