Published: 12:01 am, Sun. Jul. 31st, 2016Updated: 7:40 pm
State Land Commissioner Aubrey Dunn says continuing turmoil in the oil and gas industry has significantly impacted revenues to the State Land Office and, in turn, the state’s General Fund.
Dunn announced last week the land office’s Fiscal Year 2016 financial results. June 30 marked the end of FY16, with the Land Office’s overall revenue for this period totaling $495,449,348. This amount reflects the combination of two funds – the Land Maintenance Fund and the Land Grant Permanent Fund.
The Land Maintenance Fund is comprised of revenue generated through renewable sources such as grazing fees, rights-of-way, bonus sales, and business leases on State Trust Lands, and the Land Grant Permanent Fund is the recipient of royalties generated from oil, gas and mineral extraction. In contrast with FY15 revenue of nearly $739 million, total revenue to the two funds in FY16 fell by more than $243 million to $495,449,348. This represents an overall revenue decrease of 32 percent.
“The decline in revenues generated by the State Land Office has a direct correlation with fulfilling our state’s budget commitments,” said Dunn. “Based on Land Office projections and the impacts of the oil and gas industry downturn – not only on royalties, but also on gross receipts and other taxes – I predicted in February that the state would have a larger budget shortfall this year than previously anticipated. Unfortunately, my predictions have proven to be accurate.”
A recent report from the Legislative Finance Committee shows a shortfall of nearly $200 million for FY16, and there are estimates that FY17 revenue will be insufficient to meet the state’s budget demands.
“With less revenue on the table than previously anticipated, the state’s budgets for FY16 and FY17 will need to be adjusted by the governor and the Legislature,” said Dunn. “The people of New Mexico deserve to know the full story about our state’s fiscal health and how our elected leaders are planning to address these budget shortfalls.”
The Land Office alone has seen a 37-percent decrease in oil, gas and mineral royalties to the Land Grant Permanent Fund from royalties of $669,366,326 in FY15 to $419,744,447 in FY16. In FY15, the oil and gas industry contributed nearly 94 percent of revenues generated on State Trust Lands; however, that figure dropped to 89.5 percent in FY16.
On a more encouraging note, minus oil and gas bonus sales, revenues to the Land Maintenance Fund have increased by nearly $8 million from last fiscal year and are at their highest amount now compared to the last 20 years.
“When I took office, I learned we had an extensive backlog in our right-of-way division. Over 500 applications were still pending, dating back to 2010. Industry was concerned about the excessive amount of time that it took to process applications, which impacted their ability to move jobc-reating projects forward on State Trust Lands,” said Dunn. “I utilized my business experience to make changes to our right-of-way process, and we’ve decreased pending applications by nearly 75 percent as a result. Before I arrived at the Land Office, the average turnaround time for processing rights-of-way applications was 300 days. My administration’s goal is to ensure a 45-day turnaround – and many applications have already been approved within that timeframe. Due to better management, revenue from granting rights-of-way has increased by approximately $3 million.”
The State Land Office is responsible for administering 9 million acres of surface and 13 million acres of subsurface estate for the beneficiaries of the State Land Trust, which includes schools, universities, hospitals and other important public institutions.