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2020 State Legislative Outlook: New Mexico

As state legislatures begin their 2020 sessions, topics affecting the oil and gas industry will once again be on the agenda. Here are some issues to watch in New Mexico.

The Second Session of New Mexico’s 54 Legislature begins January 21 and will last only 30 days. Since this is a budget session, all bills must either have a fiscal impact or be on the Governor’s call. The state is enjoying a $7.8 billion windfall thanks to oil production in the southeast corner of the state. Just two counties, Lea and Eddy, accounted for 90% of the state’s overall gross receipts tax revenue growth during the 2019 budget year. Oil and gas revenue now make up about 38% of the state’s direct revenue collections, according to the Legislative Finance Committee.

However, producers are discovering that newly drilled wells in the Delaware are becoming less productive sooner, and if output lessens, this could negatively affect tax revenues to the state. With a decline in production, lawmakers are sure to focus on issues that would require a one-time outlay instead of multi-year funding requirements.

The state has already increased teacher salaries, restored state cash reserves and earmarked $400 million for highway construction, and now Gov. Lujan Grisham is proposing an endowment fund for early childhood education and an expanded college scholarship program for residents.

For more information on state policy outlooks, contact Senior Director Government Affairs Kristin Hincke.