Oil, gas dividends ripe for substantive campaign debate

Tax rebates in times of overflowing state coffers are a popular idea, so much so that two bills providing most New Mexicans $750 of tax rebates sailed through the Legislature earlier this year with the backing of Gov. Michelle Lujan Grisham.

As revenues flood in from rising oil production levels in southeast New Mexico, that sharing of the wealth will help a lot of folks cope with inflation levels not seen since the 1980s. But it also poses some valid questions: Why should that financial help just occur in an election year? Rather than routinely growing government, why doesn’t the state mirror oil-producing Alaska and share windfalls with residents?

The Editorial Board suggested in March — and not for the first time — that routinely paying oil and gas dividends directly to New Mexicans was an idea worth exploring. Our state lands and the oil and natural gas beneath them belong to every New Mexican, not just those in power in Santa Fe.

Republican gubernatorial candidate Mark Ronchetti unveiled a proposal July 6 to return millions of surplus dollars directly to New Mexicans every year in the form of an annual Oil and Gas Rebate. His proposal has trigger mechanisms that would adjust rebate amounts during steep revenue downturns to protect state programs.

Ronchetti notes state government has never been richer. Oil and gas proceeds in the No. 2 oil-producing state in the nation deliver around $6 billion a year to state coffers. “New Mexicans deserve to benefit directly and regularly from oil and gas royalties, and choose for themselves how to spend and invest those funds,” he said.

A spokeswoman for Lujan Grisham’s reelection campaign described Ronchetti’s proposal as a “fiscally irresponsible socialist scheme.”

That’s odd because during both a regular and special session this year the Democratic governor pushed for residents to get a total of $750 in three tax rebate checks. No mention that was irresponsible or socialist.

While it is an election year and campaigns are in full swing, politics should not mean good ideas are automatically dismissed because they came from the other side. And it bears repeating the Journal Editorial Board proposed serious consideration of oil and gas rebates long before the Ronchetti campaign.

Yes, annual tax rebates could mean less funding for the state budget and permanent funds, including the newly created early childhood trust fund. That’s why economic triggers are important.

But currently, the state has a record-high $8.5 billion budget due to record-high revenues. That’s a billion dollars more than the previous budget. The state had a then-alltime-high $7 billion budget in 2019-20, a 10.8% increase from the prior fiscal year.

And we have to ask, have those record-setting state budgets made clean water accessible to every New Mexican home, internet access possible across our large and very rural state, eliminated our road and bridge repair backlog, or made measurable improvements in our public schools? No, no, no and no.

Bonanza times like now are when the state can afford tax rebates to help working families pay for food and other basic essentials. New Mexicans can definitely use the help. The state’s per capita income of $27,945 is one of the lowest in the nation.

To be clear: Our support of exploring oil and gas dividends is not a campaign endorsement. Campaign endorsements for the Nov. 8 general election will come as early voting starts in October, and there are many other pressing issues facing our state to discuss.

Alaska, which trails New Mexico in oil production, has been providing rebates to residents since 1982. Offering rebates to New Mexicans deserves a substantive debate by not only Ronchetti and Lujan Grisham but also by our state House candidates as election season heats up.