Pearce: New Mexico Would Be Hurt By Royalty Cuts In Budget

Late Tuesday evening, budget conferees announced that a deal had been made on a federal budget, which includes a provision that would reduce the states’ share of mineral royalty payments from 50 percent (required under the Mineral Leasing Act) to 48 percent. This will cost New Mexico $95.5 million over the next ten years.

“Since the 1970s, states and the federal government have split mineral royalty payments 50-50,” said U.S. Congressman Steve Pearce.  “These cuts are not pocket change to the West. New Mexico schools and infrastructure projects depend on these payments, and losing out on nearly $100 million that is rightfully ours will only harm our communities. In 2008, states were asked to take a temporary two percent cut of their share of mineral royalty payments. This was supposed to be a one-year deal, but one-year extensions kept being included as appropriations riders each year. Now, this budget deal includes a ten-year extension of this practice without concern for the impact that this will have on the West for the next decade.

“The Federal Government is telling us that these cuts will pay for administrative costs to manage the mineral leases, but they have been managing the administrative costs for decades without taking additional millions from states,” Pearce continued.  “Imagine if the federal government took control of the Port Authority of New York and New Jersey, took 50 percent of its $4.1 billion in net revenue for 2012, and then decided to take another $82 million on top of that to cover administrative costs. New York and New Jersey wouldn’t stand for it, but that is exactly what the federal government is doing to the West. People in the West will continue to raise objections to a federal government that continues to exploit the resources and people of our states.”