Legislation to increase the top royalty rate for oil and gas development on New Mexico state lands has passed the House Energy, Environment & Natural Resources Committee. Senate Bill 23, backed by Commissioner of Public Lands Stephanie Garcia Richard, aims to raise the royalty rate from 20% to 25%. This adjustment aligns with rates in Texas and private lands within New Mexico.
The bill, sponsored by Sen. George Muñoz and co-sponsored by Speaker Javier Martinez, Sen. Liz Stefanics, and Rep. Matthew McQueen, promises significant financial benefits for public schools and institutions in New Mexico. "After clearing today’s committee hearing, we are now on the doorstep of historic new levels of funding for our public schools and other institutions," said Commissioner Garcia Richard.
Senator Muñoz emphasized the potential positive impact on education funding: “Raising the state’s top oil and gas royalty rate puts millions more into the state’s savings for some of our most important institutions every year.” Similarly, Rep. McQueen stated that asking oil companies to pay a fair market rate is crucial: “We shouldn’t be content to give them away on the cheap.”
The proposed legislation would apply only to new leases on productive parcels of state land. The Legislative Finance Committee estimates that adopting a 25% market rate could add $50-$75 million annually to the Land Grant Permanent Fund (LGPF). By 2050, this could increase LGPF's value by $1.5-$2 billion.
Having passed earlier Senate committees and sessions successfully, Senate Bill 23 will next be reviewed by the House Appropriations & Finance Committee.
Commissioner Garcia Richard has led efforts at the State Land Office since 2019, generating over $11 billion for public entities in New Mexico through various land leases.
