by Rep. Greg Nibert (R-Chaves and Lincoln Counties)
Winning the lottery is not a guarantee of happiness or success. We’ve all heard stories of lottery winners declaring bankruptcy just a few years after receiving multi-million-dollar payouts. Most of these tales of good fortunes gone bad share a common thread: uncontrolled spending.
New Mexico has won the oil and gas lottery. Due to the oil and natural gas boom in the Permian Basin, the state budget will likely experience a third straight year of having a billion-plus dollars in surplus revenues. From Fiscal Years 2019 – 2021, the oil and gas boom has generated or is projected to generate $3.2 billion in surplus for the state.
Unfortunately, like many of those who have struck riches through the lottery, state legislators and the governor will likely blow through every penny. In fact, they have already squandered one windfall. Earlier this year, the governor partnered with liberal legislators and spent all of the $2.3 billion in surplus revenues that were available to them, and then some. The spending frenzy was so bad that the Legislature dipped into state reserves and passed substantial tax increases to ensure the budgets for FY 2019 and 2020 were balanced.
This spending spree increased the state’s budget by a whopping 12 percent. Preliminary spending requests by state agencies for the next fiscal year are already suggesting a second year of double-digit increases. According to the Santa Fe New Mexican newspaper, many state agencies are asking for stunningly large budget increases for next year. For example, the Tourism Department is requesting a 43 percent increase, the Economic Development Department is asking for 20 percent more, the State Auditor’s office is proposing 37 percent more, the Spaceport Authority wants a 260 percent increase, and on and on. Some state agencies won’t be able to spend the increases they received this year, yet they still want more money.
To complicate this scenario, the governor has embraced an aggressive climate change agenda pushed by activists whose ultimate goal is to eliminate all fossil fuels, including oil and gas. Such a goal threatens the future ability of New Mexico to finance nearly every function of state government, including education. So, not only is New Mexico facing a looming financial doomsday, but our own governor is trying to hasten its arrival by choking the very industry that funds almost half of our state budget.
Double-digit spending increases repeat the mistakes of the past by pretending these billion-dollar surplus revenues will occur year after year. Many of my friends in the oil industry say the current boom could last for years and hopefully, they are correct. But, hope isn’t a reliable strategy on which to base a state budget, particularly adding new programs that require recurring revenue.
It was just three short years ago when New Mexico oil prices fell to $26 per barrel and drilling budgets were cut. Back then, lawmakers were forced to cut spending dramatically and depleted state reserves to keep the budget balanced. You will recall the state took money from schools, fire departments, and other agencies. How quickly we have forgotten the lessons learned during that time!
When one wins a jackpot, it’s tempting to spend the money on all the things that you think will make you happy. But to make the money last, you have to make disciplined choices. The Legislature and the governor have a choice in charting a future based on sound financial principles or one built on excessive government spending, which is not sustainable in the long run. I stand on the side of fiscal discipline and limited government.