Recently, it was announced that despite repeated attacks by the Biden administration, New Mexico’s oil and gas industry had a record year. It generated 35% of all general-fund revenue for the state budget in FY 2021 (which ended in June) – a share exceeded only once in the most recent eight-year period. In raw numbers, the industry generated almost $5.3 billion in revenue for state and local governments in the 2021 fiscal year. In other words, the industry that New Mexico has long (over) relied on and the “progressive” wing of the Democratic Party, in particular, would like to eliminate entirely, continues to prop up the State economy and budget. Ironically, the massive oil-and-gas-generated budget surplus available to legislators this January is also the ticket to the diversified economy that everyone of both political parties realizes New Mexico must have.
Legislative Finance Committee analysts described over reliance on emergency procurement as resulting from mismanagement in their October report. Legislative analysts have repeatedly warned since 2016 that government agencies’ increasing reliance on no-bid contracting puts New Mexico at increased risk of waste and fraud. Their most recent admonition came a month after a state grand jury indicted a former powerful lawmaker for racketeering, money laundering and kickbacks related to a no-bid contract.
Lawmakers have largely ignored those warnings; in fact, a bill pre-filed for the legislative session starting Tuesday in Santa Fe appears to create new exemptions to the procurement code. Nor is reform a high priority for Democratic Gov. Michelle Lujan Grisham, whose three years in office have been marked by a sharp rise in no-bid contracting.
“Such an item is not currently an element of the agenda,” said Nora Meyers Sackett, a spokeswoman for Lujan Grisham, who has the power to set this year’s 30-day legislative agenda, as lawmakers are otherwise limited to budget matters. “But the governor’s office will, as always, review and evaluate potential initiatives.”
Since 2019, Lujan Grisham’s first year in office, her administration has circumvented competitive bidding on at least 886 occasions, approving sole-source and emergency contracts worth more than $796 million, greatly outpacing her Republican predecessor, according to New Mexico In Depth’s analysis of reports from state agencies under Lujan Grisham’s control.
Lawmakers will appropriate a record amount of state money in 2022, thanks to unprecedented oil and gas production. Revenue to pay for year-over-year spending, versus one-time costs, in the fiscal year that begins July 1 is projected to go up by 11%, and most of that — 60% — is due to New Mexico’s dominant industry.
We’ve been here before — entering a legislative session flush with cash with projections that an oil and gas boom will last years. But budget leaders at the Legislature know better, precisely because they’ve experienced first-hand the volatile roller coaster of the oil and gas industry’s notorious boom-bust cycles.
A graph put together by the Legislative Finance Committee demonstrates the past turbulence aptly.
Two years ago, in 2020, state lawmakers went on a spending spree due to robust oil and gas production that economists and industry experts predicted would continue for a decade or more, only to return to Santa Fe a few months later to adjust spending after COVID-19 shut down the global economy.
It was an extraordinary moment, one that demonstrated the wisdom of caution when betting on long-term strong oil and gas production.
And, yet, this is where state lawmakers find themselves in January 2022 as oil and gas production has climbed to its pre-COVID peak.
Despite aspirations to wean itself from over-reliance on fossil fuels, New Mexico continues to reap the benefits of oil and gas production, to the tune of $1.6 billion in new money. That’s the amount of dollars coming in for fiscal year 2023 over the expenses of this fiscal year, which ends June 30.
The debate over how cautious to be is playing out in talks about the state’s public education.
As the single-largest item in New Mexico’s state budget, public education commands a central role in every legislative session.
This year is no different, except perhaps in the size of the windfall New Mexico is experiencing and how much cash Gov. Michelle Lujan Grisham and the Legislature want to give public schools and classroom teachers.
The Legislature’s budget arm, the Legislative Finance Committee, proposes spending $421 million more — 12% — over this fiscal year. The governor is in the same vicinity.
Part of the reason for the intense focus is the state’s continuing attempt to right generational education inequities identified in a 2018 landmark court ruling that found New Mexico guilty of violating its responsibility to educate all children equitably.
That generational inequity has contributed to differing education outcomes for groups of students by race or ethnicity, with fewer non-white students graduating than their White peers and performing poorer in reading and math proficiency. A consensus has emerged in recent years among policy makers that more should be spent to address these inequities.
When recent high school graduate Chaslyn Tafoya of Taos Pueblo was asked in a public forum with New Mexico’s education secretary what she loved most about where she called home, she pointed to her culture, her language, and her tribal community. When asked what threatened what she loved most, she replied, “public education.”
Her response echoed the verdict issued by New Mexico’s First Judicial District Court in its 2018 Yazzie/Martinez ruling: Indigenous students “will be irreparably harmed” if the State does not enact a comprehensive overhaul of public education. The Court ordered the State to implement the New Mexico Indian Education Act of 2003, which requires the New Mexico Public Education Department to collaborate with Tribes in providing a culturally and linguistically relevant education to Native students.
Public education has long posed an existential threat to our Native children and to the cultural survival of Indigenous peoples. The recent discovery of mass graves at Indian boarding schools exposes only the most egregious atrocities committed in the name of Western education. After boarding schools came the forced integration of Native children into public schools.
Indigenous communities in New Mexico have long dealt with the negative impacts of experimental energy projects promoted by state and federal governments.
This legislative session, as the state faces a climate crisis that is already disproportionately impacting Indigenous, low-income, and communities of color, the stakes of energy policies are higher than ever.
Why, then, is New Mexico Governor Michelle Lujan Grisham touting the hydrogen fuel industry, which is nothing short of a scheme to subsidize oil and gas companies and keep the state dangerously reliant on fossil fuels?
The governor’s proposed “Hydrogen Hub Act” promotes hydrogen as a clean energy solution. But 96 percent of hydrogen production in the U.S. requires fossil fuels, and burning hydrogen is worse for the environment than burning coal.
Hydrogen development will only exacerbate the climate crisis the state is facing, while distracting state agencies from investing in meaningful climate solutions and renewable energy projects, like solar and wind.
As leaders in an Indigenous organization whose members and communities would be directly impacted by hydrogen development, we have taken a stand against all false climate solutions in New Mexico, including hydrogen, and are calling on the Governor to stop sacrificing our lands, waters, and communities.
Hydrogen is currently produced using methane gas – the “gas” in oil and gas. Converting methane to hydrogen promotes more fracking in our communities and releases carbon dioxide in the process. To boot, converting methane to hydrogen requires enormous amounts of energy, energy that today mainly comes from the burning of fossil fuels. Where will these fossil fuels come from?
New Mexico’s oil and natural gas industry is growing again, which is welcomed news to lawmakers, communities, and all people across the land of enchantment. Through challenges and changing times over the past two years, our dedication to New Mexico has been unwavering and we’re committed to doing our part to help New Mexico succeed. New Mexico’s oil and gas industry is proud to be the foundation of the state’s economy, providing thousands of jobs across our state and supporting the budget and public schools with billions in revenue. Teachers, students, first responders, and many others depend on our industry for critical resources to support learning, develop the next generation of leaders, and keep our communities healthy and safe. Our state’s role as an energy producer and leader was underscored earlier this year by our ascension to the second-largest oil producer in the United States while remaining the eighth-largest producer of natural gas.
When Governor Michelle Lujan Grisham announced during the New Mexico Climate Summit in late October she would champion a law to achieve “net zero” greenhouse gas emissions by 2050, she received accolades from the environmental community.
“Net zero” refers to a movement to reduce and offset through environmentally friendly policies and practices the greenhouse gases that would otherwise reach the earth’s atmosphere. Lujan Grisham’s stated objective builds on an already ambitious goal set in 2019 by the Legislature and her administration to transition New Mexico by 2045 from fossil fuels to renewable sources of energy to power its electricity grid.
Getting to net zero by 2050 has become a global rallying cry to halt warming to 1.5° degrees Celsius above pre-industrial levels, in order to arrest catastrophic impacts of a changing climate. Impacts are increasingly evident now: high-severity drought and wildfires, increasing hurricanes, melting glaciers and rising sea levels.
On paper, the path toward Net Zero sounds simple: drastically curtail current greenhouse gas emitting activities while increasing clean energy and activities that capture greenhouse gases before they enter the atmosphere.
But it’s not simple. Achieving Net Zero encompasses altering all sectors of the economy.And the battle over which path to take toward it can prove vexing.Lujan Grisham has found herself at odds with a who’s who of environmental and community groups over her signature piece of legislation in 2022, a proposed Hydrogen Hub Act, which would provide state incentives like tax credits to support creation of a hydrogen fuel industry.
The governor’s view is that building a hydrogen fuel industry can be a win/win if done right. “For an energy state, it’s more jobs,” she said on a September podcast about hydrogen, and it “gives us a clean energy platform.”
Hydrogen, when burned, doesn’t emit greenhouse gases.