By Will Cavin
New Mexico has been the epicenter of America’s energy revolution over the past decade. The boom in oil and gas drilling in the Permian Basin has created thousands of good-paying jobs and made the country more energy-secure, with much of this growth in development occurring on federal lands. But for public lands counties like mine, the recent economic downturn shows why we need strong revenue sharing and other guaranteed federal support for essential services provided by local governments.
Chaves County is approximately 31% federally owned, with the Bureau of Land Management the biggest landholder within our jurisdiction. Last year, more than one billion barrels of oil were produced on lands managed by the U.S. Department of the Interior, generating $7.3 billion for the federal treasury. This reflected a 21 percent increase in federal oil and gas revenues over the previous year.
New Mexico played no small part in this spike in production, which not only benefited our economy but also supported the needs of our state and local governments. Petroleum production alone accounted for $3.1 billion in revenue to the state of New Mexico, making up nearly 40 percent of our general fund. Royalties from oil and gas development keep teachers in the classroom, law enforcement patrolling our streets, and our local parks and other conservation areas in good condition.
But the COVID-19 pandemic has led to an economic slowdown and a significant drop in petroleum prices. Fewer Americans took road or airplane trips during the summer travel season, causing a massive drop in fuel demand. Decreased overall economic activity in communities throughout New Mexico ensued. Local tax revenues have plummeted by over $700,000 so far this year, while demand for social services, many of which are funded by county governments, skyrocketed.
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Local governments are also unable to collect property taxes from those federal public lands within our jurisdiction. Congress created the Payments In-Lieu of Taxes (PILT) in 1976 to provide direct assistance to federal lands counties and make up for lost property tax revenues. This year, Chaves County collected $3.3 million in PILT funding, accounting for approximately 20 percent of our general fund.
In addition to providing services to residents, counties are responsible for responding to emergency situations and maintaining infrastructure on public lands. County crews pave many of the roads crossing federal lands that the energy industry and other businesses use to move their products every day. Should Congress fail to fund PILT, Chaves County would be forced to lay off 25 percent of our sheriff’s deputies and half of our road department staff. At this time of fiscal and economic uncertainty, it is imperative for Congress to permanently reauthorize and guarantee full funding for PILT, rather than leaving local government budgets dependent on the politics of the annual congressional appropriations cycle.
Plummeting oil and gas prices have had a uniquely detrimental effect on public lands counties. The budgetary squeeze brought on by reduced petroleum production revenues and the uncertainty of a large, untaxable federal land base leaves us with difficult decisions that impact people’s lives.
It is crucial that the federal government provide long-term support for public lands counties.
Will Cavin is a Chaves County commissioner. He serves on the National Association of Counties Western Interstate Region Board of Directors. The views expressed are those of the author.