From the Ruidoso News
New Mexico captures a greater share in oil and gas revenue than eight other western oil and gas-producing states in a comparative analysis compiled by the New Mexico Tax Research Institute and Moss Adams released Thursday.
“New Mexico obtains the greatest percentage of total oil and gas production value directly contributing to government revenue when compared to eight other states,” Dr. John Tysseling, a co-author of the report and Consulting Director at Moss Adams, said.
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 percent of the oil and gas production value as revenue for state and local governments, compared with Texas, the next highest, at 14.9 percent, the study states. In other words, New Mexico gets 20.7 percent from taxes and royalties of the market value of a barrel of oil, and the state of Texas gets 14.9 percebt.
Last year, New Mexico received more than $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.
The study also shows that New Mexico has the third highest tax rate on oil and gas, or 11.5 percent compared to the highest rate of 12.5 percent in two other states.
“Our tax rate is near the highest among the states studied,” Richard Anklam, president and executive director of the New Mexico Tax Research Institute, said..
With taxes and royalties, New Mexico gets more by percentage than any other state in the study, 20.7 percent in Fiscal Year 2017, with 11.5 percent coming from taxes and 9.2 percent 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,” Tysseling said. “New Mexico is doing a great job of leveraging its oil and gas assets to get revenue for the government.”
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, according to the study summary.
“We are blessed in this state to have a permanent fund such as ours,” Tysseling said. “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 the nine-state region.
“New Mexico is getting, by far, more out of its oil and gas industry than any of the other states,” Anklam said.
Anklam and co-authors of the study from Moss Adams were scheduled to appear before the House Appropriations and Finance Committee on Friday for a presentation to state legislators.
The study is the product of an exhaustive analysis of taxes, royalties and permanent funds from nine onshore states: Montana, North Dakota, Wyoming, Utah, Colorado, Kansas, New Mexico, Oklahoma, and Texas. It’s one of the first studies of its kind that goes beyond just tax revenue, comparing the value of the oil and gas industry to state and local governments.
The study concentrates on how much revenue is generated by the oil and gas industry for the state of New Mexico, and how that compares with other states.
New Mexico taxes oil and gas production at rates higher than all but two other states (six tax at a lower rate) and New Mexico is near to the highest tax rate among the states studied.
The historic decision to invest in a permanent fund creates stable, recurring investment income even when the market prices fluctuate. Compared with New Mexico, no other state in the study area receives as large a share of tax, land income (royalties) and investment returns of the industry’s total production value.
