New Mexico too reliant on fossil fuel revenue, analysts say

Record oil production has pushed state tax revenue to an all-time high, but analysts warned New Mexico lawmakers Monday the state has become too dependent on fossil fuel money and could face severe shortfalls in the next market downturn.

National financial consulting firm PFM told the legislative Revenue Stabilization and Tax Policy Committee the industry’s exceptional windfalls were due to a market anomaly brought on by a spike in energy demand after the coronavirus pandemic’s slowdown, combined with the war in Ukraine causing a foreign supply shortage.

This boom is bound to fade with market fluctuations and changes in energy policies and could lead to as much as $36 billion less in fossil fuel revenue in the next 15 years than the state’s yearly forecasts suggest, PFM Director Ryan McNeely said during a PowerPoint presentation.