Lujan Grisham calls to spend big in State of State speech, as New Mexico rakes in oil money

New Mexico Gov. Michelle Lujan Grisham vowed to reduce statewide pollution, chiefly from a fossil fuel industry that makes up a third of the State’s budget, during her annual State of the State address Tuesday in Santa Fe.

But she also hoped lawmakers would approve several initiatives contained in the governor’s record $9.4 billion spending plan, targeting improvements to public education, health and addressing poverty in New Mexico, propped up by revenue from expanding oil and gas activities in the state.

The speech marked the opening of the 60-day Legislative Session, intended to focus on policy initiatives lawmakers will consider for the coming years, with Democrats in both the House and Senate already prefiling several bills targeting pollution and boosting renewable energy.

More:Energy and environment bills to watch during New Mexico's 2023 Legislative Session

Environmental issues were a key segment of the Lujan Grisham administration’s agenda since she took office in 2019 and passed the Energy Transition Act which set a benchmark for New Mexico to produce 100 percent carbon-free energy by 2045.

Lujan Grisham also touted in the last two years emission restrictions on oil and gas operations imposed by her Energy, Minerals and Natural Resources Department in 2021 and at the New Mexico Environment Department in 2022, aiming to hold the industry accountable for its environmental impacts mostly in the southeast Permian Basin oilfields.

Here are the top energy and environment takeaways from the 2023 State of the State speech.

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“In New Mexico today, we have a more robust economy than we have seen in decades.”

The governor frequently touted New Mexico’s economy throughout the speech, as the State reported a revenue surplus of about $3.5 billion largely credited to oil and gas production throughout 2022.

Last year saw the market for domestic fossil fuels boom, as fuel demanded recovered from the COVID-19 pandemic and Russia, the second-largest oil producer in world after the U.S., was largely removed from global markets after its invasion of Ukraine.

New Mexico shares the U.S.’ largest oilfield, the Permian Basin, with Texas, and grew last year to become the second-largest oil-producing state in the U.S. after Texas.

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The basin was estimated to produce about 5.5 million barrels per day (bpd), almost half of the 11.7 million bpd produced nationwide, according to the Energy Information Administration (EIA).

Continued growth throughout last year in the region provide windfalls of revenue for New Mexico, which the governor said she hoped to spend on improving public services for New Mexicans.

But state economists warned that increasing spending of oil money could leave the state vulnerable to future downswings in the volatile energy markets.

More:Oil money windfall pushes New Mexico spending proposals to $9.4B. Lawmakers warned of bust

“Now, we are investing further in a dynamic, growing economy.”

The governor sought to take advantage of the recent windfall, which could mean $1 billion in economic relief proposed by Lujan Grisham, and tax rebates of up to $750 for individual filers or $1,500 for joint filers.

She also said in her speech she would target cuts to personal income and gross receipts taxes to help support local businesses.

Part of the revenue would also go to help New Mexico’s homeless, if the governor’s plans are approved.

More:Energy storage pushed by New Mexico lawmakers via tax credits to boost renewable power

In the State of the State, she pushed for $100 million in proposed spending for housing programs and eviction protection.

She also argued for investments in infrastructure using the bulging state coffers, proposing $146 million for expanding broadband access statewide and $128 million to improve water infrastructure.

Childcare and early education would also get a boost by the governor’s budget proposal, she said in the speech, buoyed by oil and gas revenue, boosting the Early Childhood Trust Fund and continuing to support the Opportunity Scholarship to offer free college tuition for New Mexico students.

More:'Resource curse' could imperil New Mexico's oil-dependent economy, economists warn

“We know that these fires were intensified by extreme weather brought on by climate change…”

The governor shifted her speech to the environment from her priorities for healthcare, law enforcement and first responders by referencing New Mexico’s record-breaking wildfires in spring 2022.

She argued the state’s largest in history, the Hermits Peak Calf Canyon Fire which burned 341,735 acres in April and others like the state’s second largest ever the Black Fire that burned 325,136 acres in May, were exacerbated by climate change.

She said the State will offer $100 million in relief to communities impacted by the Hermits Peak Calf Canyon Fire and will target $2.5 billion in disaster relief from the Federal Emergency Management Agency (FEMA).

More:New Mexico 'ready' for federal air pollution restrictions, despite oil and gas opposition

But the governor also hoped the state would address what she called the root cause of the fires: the aridification of New Mexico brought on by continual, manmade pollution.

She pointed to the State’s 30x30 initiative, following a commitment by the federal government to conserve 30 percent of public land from development by 2030, and argued for her proposed $75 million Land of Enchantment Legacy Fund to fund conservation and environmental initiatives at the state level.

The State could also codify into its constitution a commitment to zero-emissions as outlined in the Energy Transition Act, Lujan Grisham said, contending “our focus on clean energy, sustainability and protecting our environment is a model for the entire nation."

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.

This article originally appeared on Carlsbad Current-Argus: Energy and environmental takeaways from 2023 Mexico State of the State