American Oil and Gas Reporter - February 2015 - 38

New Mexico's Roads Drawing Scrutiny
SANTA FE, N.M.-With commodity
prices significantly below last year's
levels, legislators in oil and gas dependent
New Mexico will spend a lot of time this
session analyzing their fiscal prospects,
predicts Steve Henke, president of the
New Mexico Oil & Gas Association.
"At this point, we have not seen or
heard that legislators will look to oil and
gas for increased revenues to fill their
budget holes, but anytime there is a shortfall
between what the state needs and what
revenues are, legislators tend to look to
big sources, such as the oil and gas industry,
as a potential opportunity," Henke says.
"Budget concerns and what the state's capabilities will be have dominated some of
the early legislative conversations."
Mike D'Antonio, NMOGA's legislative
affairs director, points out that the November elections changed Santa Fe's political environment, with Republicans
gaining control of the House of Representatives for the first time in 60 years.
Democrats still dominate the Senate, but
with Republicans taking charge in the
lower chamber and Republican Susana
Martinez sitting in the governor's chair,
he says there is increased optimism that

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38 THE AMERICAN OIL & GAS REPORTER

bills friendlier to oil and gas interests
will emerge in the 2015 session.
There are a few themes emerging in
the New Mexico Legislature already,
D'Antonio says. "One is that the roads
in the state are showing great needs. The
road program has not been sufficiently
funded in the past to keep up with the
growth in many areas, even the oil-producing areas. There are several bills
related to road taxes in some form or
fashion, either tapping the severance tax
fund or creating new taxes such as the
gasoline tax."
According to D'Antonio, one proposal
involving roads emerged in the first week
of the legislative session. Senator Ron
Griggs, R-Alamogordo, introduced SB
114, which authorizes municipalities or
counties to levy a special fuels tax on
diesel-engine fuel, biodiesel, blended
biodiesel, or kerosene used to power a
motor vehicle sold within their borders
of as much as 2.0 cents a gallon, with the
revenues directed to a bond program.
Those bonds could be used for road,
street or highway construction, vehicle
emissions inspection programs, or public
transportation projects, he says.
Land Grant Fund
Henke adds that unlike Texas, which
is allocating money from its Rainy Day
Fund to pay for road improvements, New
Mexico's Land Grant Permanent Fund
was designed for a different purpose.
"The legislative history and design of
New Mexico's Land Grant Permanent
Fund was for it to replace revenues generated by the oil and gas industry when
those resources were depleted," he says.
"New Mexico does not have a rainy day
fund or an emergency fund."
NMOGA Communications Director
Wally Drangmeister points out that during
the past three sessions, legislators have
introduced proposals to increase distributions from the Land Grant Fund, which
is New Mexico's largest permanent fund,
but those efforts focused on preschool
education and other programs, not infrastructure.
Legislators are seeking other avenues
to fund road projects in New Mexico,
Henke says. Representative Larry Larrañaga, R-Albuquerque, is sponsoring
HB 92, which calls for issuing severance
tax bonds devoted to road projects and
for making capital outlays more consistent
with the state's transportation plan as
well as its energy infrastructure needs.
Henke says HB 92 would create a
transportation projects fund using revenues

generated by selling as much as $60 million annually in severance tax bonds.
Each year, the New Mexico Economic
Development Department would list projects in the statewide transportation improvement plan critical for economic development or developing energy resources,
and allocate necessary funds for those
projects.
Other Issues
D'Antonio says another item sparking
early-session discussions in the statehouse
is whether New Mexico should be a rightto-work state, which is part of Republicans'
broader push for job creation. Governor
Martinez supports allowing employees
to decide not to join labor unions. In
states without right-to-work statutes,
unions negotiate on behalf of all workers
and can require workers to pay union
dues, even if they are not members.
"If a worker wants to join a union,
then he will. But it is fundamentally
wrong to require membership or take
money from the paychecks of our workers
in order to get a job," Martinez said in
her State of the State Address. "This is
gasoline money, rent or a car payment
for these workers. Studies have shown
that states where workers are allowed to
make this choice for themselves have
higher employment levels and companies
locate there more often."
D'Antonio predicts right-to-work legislation will take a lot of legislators' time
and effort this session. "It is a big deal
for New Mexico because of the lack of
economic development," he says. "New
Mexico gets dropped off a lot of lists automatically when companies are looking
for economic-based jobs because it does
not have a right-to-work statute in place.
We think that will suck a lot of the oxygen
out of other bills that may come up."
According to published reports, Republicans contend right-to-work will bring
better-paying jobs to the state and reduce
unemployment. Reports suggest that one
of the reasons New Mexico lost the competition to host a battery-making facility
planned by electric automaker Tesla in
2014 was because it was not a right-towork state. New Mexico, Texas, Arizona
and California all pursued the plant, with
Nevada capturing the prize.
Session Outlook
Before the 2015 legislative session
opened, D'Antonio says NMOGA identified a small number of bills that could
have a negative impact on the oil and gas
industry, adding, "I think the nice thing
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American Oil and Gas Reporter - February 2015

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