Commentary:
In New Mexico, our fiscal house has been fueled by oil and gas. This resource was pumped out from underneath our feet and is part of the structure. It put a lot of people to work and helped put a roof over our heads – but now the foundation is unsteady. The ceiling is sagging, the floors are sloped, and the walls are full of chemicals. So, when it comes time to renovate, what should we do: tack on an oily addition? Or get out our tools and fix the underlying issues?
With an historic budget surplus, New Mexico has the opportunity to rebuild our house – and a hearing happening April 12 could jumpstart construction. Through the Opportunity Enterprise Fund, there is now $70 million available “to increase economic activity in the state by providing financing for new or existing commercial facilities to attract businesses to New Mexico communities and allow existing businesses to expand their operations.” In other words, it’s an opportunity to roll up our sleeves and build out a new structure – one that opens new doors to a thriving and resilient economy for all New Mexicans.
The people in charge of how this money gets used form the Opportunity Enterprise Review Board (OERB), a 12-member body that is designing the application process, creating rules, and choosing which projects to fund. The board will meet on April 12 to make these decisions, which include choosing whether or not to review a project’s environmental impact, its community benefits (including agreements with local workers), and its potential to diversify the state economy before funding it with taxpayer money.
In deciding how to roll out this fund, the OERB has the opportunity to repair some of the cracks in New Mexico’s foundation and weatherize our house for the storms (and the sunshine) ahead. With the right definitions and guidelines in place, the board can help refurbish the financial ecosystem for New Mexico’s future. Without them, they risk letting our house crumble. Our state has an unprecedented budget this year partly due to oil and gas revenues, but this is a tipping point.
Financial experts, energy agencies, and our Economic Development Department have been warning for years that our dependence on the oil and gas sector for revenue is a dangerous long-term strategy. The state may be overestimating its 15-year projected revenue by $26 billion to $36 billion according to a report released by PFM Group Consulting in January. Since 2020 alone, New Mexico has experienced a sped-up version of the typical boom-and-bust cycle of oil and gas, with crude prices swinging from $115 a barrel to -$38 a barrel. The state’s economic diversification plan recognizes this, saying, “In the long run, as the world transitions from fossil fuel to renewable energy, the need for New Mexico to develop new drivers of economic growth will become ever more urgent.” This plan emphasizes that environmentally sustainable development is a key driver for economic growth and lays out a 20-year strategy for diversifying New Mexico’s economy away from its over-reliance on oil and gas.
How the state uses economic development funds, like the Opportunity Enterprise Revolving Fund, must align with this strategy. In designing the application and review process for which projects to fund, the OERB has the power to help secure the state’s jobs base and long-term fiscal health, protect its environment, and expand resources to historically disadvantaged individuals and communities. With these common goals, we can shore up our foundation, put lots of people to work fixing the cracks, and open new doors all over our beautiful state.
We urge the Opportunity Enterprise Review Board to build for New Mexico’s future by adopting policies that prioritize economic diversification, strengthening our economy, and providing our families shelter for many generations to come.
Paige Knight, MPP, is a senior research and policy analyst with New Mexico Voices for Children.