ALBUQUERQUE, N.M. – New Mexico captures a greater share in oil and gas revenue than eight other western oil- and gas-producing states in a comparative analysis done by the NM Tax Research Institute and Moss Adams that was released today.
“New Mexico obtains the greatest percentage of total oil and gas production value directly contributing to government revenue when compared to eight other states,” said Dr. John Tysseling, a co-author of the report and Consulting Director at Moss Adams.
New Mexico is capturing a greater share in oil and gas revenue than any of the other eight states studied in the report, which include Montana, North Dakota, Wyoming, Utah, Colorado, Kansas, Oklahoma, and Texas.
New Mexico captures 20.7% of the oil and gas production value as revenue for state and local governments, compared with Texas, the next highest, at 14.9%. In other words, New Mexico gets 20.7% from taxes and royalties of the market value of a barrel of oil, and the state of Texas gets 14.9%.
Last year, New Mexico received over $3 billion from the production of oil and gas for the state and local budgets, which contributed to the state’s surplus of over $1 billion this year.
Tax rate near the top
In addition, the study shows that New Mexico has the third highest tax rate on oil and gas, or 11.5%, compared to the highest rate of 12.5% in two other states.
“Our tax rate is near the highest among the states studied,” said Richard Anklam, president and executive director of the New Mexico Tax Research Institute.
With taxes and royalties, New Mexico gets more by percentage than any other state in the study, 20.7% in Fiscal Year 2017, with 11.5% coming from taxes and 9.2% from royalties.
“If you add taxes and royalties together, and compare these revenues with other states in this region, we get a larger share than any other state, by quite a lot,” said Tysseling. “New Mexico is doing a great job of leveraging its oil and gas assets to get revenue for the government.”
Permanent fund a blessing to state
In addition, the permanent fund and severance fund, with close to $21 billion in assets, creates an additional $1billion in FY2018 for the state’s general fund.
“We are blessed in this state to have a permanent fund such as ours,” said Tysseling. “Not only does it create a stable, recurring revenue source for the eventuality when oil and gas does not create such fiscal revenue, but it also distributes almost $1billion a year for our general fund now.”
All in all, this study portrays New Mexico as a state that gets more for state and local government than any other in this nine-state region.
New Mexico gets more
“New Mexico is getting, by far, more out of its oil and gas industry than any of the other states,” said Anklam.
Anklam and co-authors of the study from Moss Adams are scheduled to appear before the House Appropriations and Finance Committee on Friday for a presentation to legislators.