Oil and education go together in New Mexico

Education and oil. In New Mexico, the two are inextricably intertwined.

New Mexico must fix its education system to advance our people’s quality of life. Oil is what will pay for it.

Oil and education – and how one depends on the other — dominated the agenda at the annual legislative forum of the Association of Commerce and Industry, New Mexico’s statewide chamber of commerce. Missing from this meeting were the usual clichés about other aspects of economic development. This was about oil.

Start with the statement by energy executive Deanna Archuleta, introducing a speaker on the oil and gas situation, that “Nowhere in the world is oil produced as responsibly as it is in New Mexico.” That point was echoed by the speaker, Marty Durbin, President of the U.S. Chamber of Commerce’s Global Energy Institute. As long as there is a demand for oil and gas, they will be produced somewhere, the argument goes. It’s better for the environment globally if they are produced here with responsible regulation than someplace else like Russia or Iran.

Among many benefits of New Mexico’s oil production, Durbin said, is that US production stabilizes international markets. He pointed to the recent Iranian attack on a Saudi oil facility, which affected Saudi production. American oil kept the international price stable after that incident. And of course there’s the economic benefit to New Mexico, including billions to the state’s economy and a 31,000-job increase in the state’s workforce.

To dampen any excessive optimism, David Abbey illustrated why economics is sometimes called the “dismal science.” As Director of the Legislative Finance Committee, part of his job is to restrain the spending impulses of legislators in good times. “Be careful with windfalls!” was part of his message. In 2017, he recalled, legislators had to cut budgets by eight percent and came out of that painful process saying they never wanted to go through that again.

In the midst of the current oil boom, he explained that the volume of oil production is volatile and so is the revenue it produces. With 300 million barrels produced this year, New Mexico was expecting 400 million next year but the projection is now down to 360 million. To help its revenue projections, the LFC keeps count of active drilling rigs. There are now about 100 operating in New Mexico. Any decline in drilling rigs this year means a reduction in revenue next year.

Abbey noted that revenue to the state comes two ways, severance tax and royalties. Severance tax is generated from all oil production. Royalties are paid only when oil is produced on land owned by the state.

The recently established “rainy day fund” will help with stability, Abbey said. Under legislation sponsored by the late representative Larry Larranaga, the fund will siphon off oil revenue during peak periods and set it aside.

Abbey, like the other ACI speakers, spoke supportively of the current initiatives on education, especially those that add time in the classroom for “at risk“ children who start out with educational disadvantages. He said 80 percent of four-year-olds are now in pre-K, and that programs may add as much as two and a half years of school for some New Mexico children. The K-5 Plus program extends the school year for students in kindergarten through fifth grade by 25 instructional days, with additional days for children in eligible schools.

Abbey also cautioned that appropriations by the legislature are only the first step in implementing any new education initiatives. In the last year, roughly $100 million appropriated for education was not spent. He said some school districts are not ready to implement the programs.

This meeting was the annual event which ACI formally approves the legislative agenda developed by its members. That agenda, including all-out support for the state’s ambitious education initiative, was approved unanimously. This year, nobody is talking about frugality where it comes to spending money on education.

Triple Spaced Again, © New Mexico News Services 2019

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