STATE LAND OFFICE NEWS
The New Mexico State Land Office will again rake in over $1 billion in revenue for the recent fiscal year. Given the nature of oil and gas royalty payment collection, final total royalty revenue will not be posted until October. With conservative projections for the last two months of the fiscal year, 2020 revenue is projected to be approximately $1,065,000,000.
“In these uncertain times driven by the COVID-19 pandemic, we are grateful to still be Open for Business and making an impact for New Mexico families. Every dollar that we raise goes directly back into communities, supporting vital institutions, with the largest chunk of our revenue going to help fund our public schools who need resources now more than ever,” Commissioner Garcia Richard said. “That we were able to again break $1 billion is a testament to the staff of the Land Office. Navigating an unprecedented pandemic wasn’t in the plan, but our employees rose to the occasion with our beneficiaries, our mission, and priorities in mind.”
Every dollar earned by the Land Office is a dollar taxpayers do not have to pay to support public institutions, saving the average taxpaying household an estimated $1,500 yearly and helping to keep the tax burden low for struggling families in these difficult times. The Land Office raises revenue from business lease payments, renewable energy project leases, oil and gas payments and earnings, right-of-way easements, livestock grazing leases, permits, interest, fees and royalties.
Revenue from these sources is deposited into one of two funds before being distributed to public schools, colleges, hospitals and other important state institutions. Money brought in from leases that do not permanently deplete a resource, such as renewable energy, livestock grazing, business leases, or planning and development, is deposited into the Land Maintenance Fund, which is distributed monthly to beneficiaries. Money from deals that deplete a resource, such as royalty paid for the extraction of oil, gas and minerals, is deposited into the Land Grant Permanent Fund, and distributed to beneficiaries after investment by the State Investment Council.
Oil and gas exploration and the subsequent royalty paid on production remains the Land Office’s largest revenue source, totaling 90.4% of all receipts, down by 3% compared to 94% of all receipts in fiscal year 2019.
The estimated total royalty to be sent by the Land Office to the State Investment Council for investment in the Land Grant Permanent Fund for fiscal year 2020 is over $879 million.
Garcia Richard added, “It’s important for the Land Office to be seen as a consistent source of income for the institutions that we support. We are working hard to diversify our revenue sources to assure that if we see future decreases in the price of oil like we did this year, other activities are thriving so that the beneficiaries don’t take a hit.”
Notable revenue changes in FY 2020 over FY 2019 include:
- a 118% increase in revenue from wind energy projects and lease payments (from $406,685 in FY 19 to $885,273 in FY 20)
- a 58% increase in revenue from right-of-way easement payments (from $24.7 million in FY 19 to $39 million in FY 20)
- a 5% decrease in oil and gas royalty payments (from $899 million in FY 19 to $854 million in FY 20)
The State Land Office has worked with lessees where revenue decreases as a result of the pandemic put a strain on business operations. This includes prioritizing projects and efforts to help businesses including deferring rent payments and implementing a rule change to allow temporary shut-ins of oil wells until prices stabilize.
Based on lower and unpredictable oil and gas prices as well as a decrease in production due to the COVID-19 pandemic, the Land Office predicts fiscal year 2021 revenue to be a different story than the billion dollar years of 2019 and 2020. Commissioner Garcia Richard has stated her intent to prioritize revenue diversification through renewable energy projects, economic development opportunities, and outdoor recreation partnerships in order to maximize the potential of the state trust land in her care.