Lawmaker: Capital outlay projects will take biggest hit from revenue change

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Oil was $30 a barrel when Stuart Ingle was elected to the state Senate in 1985. He also recalls the price plummeted to $4 a barrel a short time later.

New Mexico relies heavily on taxes and royalties from energy production, so a drop in oil prices means a drop in revenue — a $1 change in oil prices causes a $7.5 million change in revenue, according to Finance and Administration Secretary Tom Clifford.

“It’s happened before and it will happen again,” said Ingle, a Roosevelt County rancher and longtime Republican minority leader.

A forecast released Monday shows $141 million in new revenue should be available in the next budget year for spending increases on state government programs and public education, about half of what was predicted in August.

Ingle said the state’s operating budget is funded by gross receipts taxes, not oil revenues. Capitol outlay projects will take the biggest hit from the cut in projected oil and gas revenues, Ingle said.

Ingle said funding for the remainder of this year and next year’s budget is secured, and it’s not like the state is going to shut down energy production in the near future.

“I don’t think we’re going to lose any jobs in the oil and gas industry,” he said. “There’s so many projects under contract.”

Ingle said lawmakers have been able to bank $600 million in reserves in recent years while revenues were high.

“The economy is so volatile nowadays, you have to be careful,” Ingle said.

Clifford dismissed concerns New Mexico would have to make cuts or put education or other reforms on hold.

“This is adequate money for us to prepare a responsible budget that meets the highest needs of New Mexico,” Clifford said. “This situation does not call for us to raise taxes. It’s not a dire situation. The responsible thing is we have to prioritize our funding.”

The state received a little over $1.1 billion in revenue coming from oil and gas last year.

The Associated Press contributed to this report.