The revenue from the industry comes from the royalty payments collected from ad valorem production taxes, equipment ad valorem taxes, and lease payments.
These taxes are assessed in the 12 natural gas, oil, and carbon dioxide producing counties in NM.
In the northwestern corner of the state the counties of San Juan, Rio Arriba, McKinley, and Sandoval produce mostly natural gas out of the San Juan Basin.
In the southeastern corner of the state the counties of Roosevelt, Chaves, Lea, and Eddy produce oil from the Permian Basin.
Tax Revenue
In 2011, tax revenues from mineral extraction in the state amounted to 18.63% of the state’s total tax revenue.
In 2011, the estimated total recurring general fund revenues will be $5.469 billion.
New Mexico collects royalties (ad valorem production and ad valorem production equipment taxes) from production of natural gas and oil on lands managed by the State Land office. These revenues were $426 million for fiscal year 2011.
The revenues from the natural gas and oil industry go to the Land Grant Permanent Fund of the State of New Mexico.
The Land Grant Permanent Fund benefits: NM public schools; seven NM Universities, NM school for the deaf, blind, and visually impaired; NM Military Institute; the three major NM hospitals; public building repair; the penitentiary; and water projects.
Tax Distribution
Revenues from natural gas and oil taxes were distributed to four major categories. These included: (1) the state general fund, (2) local governments, (3) the severance tax bond fund, and (4) other state funds.
Natural gas and oil taxes rank 4th in terms of New Mexico state’s general fund income sources (behind Gross Receipts and Personal Income).