“You can’t govern with that kind of instability,” said James Jimenez, executive director of the advocacy group New Mexico Voices for Children. The economic whipsawing does major harm to education, he said. “When oil prices crash — and this won’t be the last time they do — it means our universities have to charge higher tuition and our K-12 finances suffer.”
Pre-pandemic New Mexico saw a boom in oil and gas extraction, which was mirrored by an increase in state revenue. And while many state leaders opined that this boom was going to last indefinitely, the reality for the industry was far more grim. “In short,” the report states, “while New Mexico posted record oil and gas revenues, the oil and gas industry itself was reporting steep losses.”
“Moving forward, we think New Mexico needs to continue investing in the programs that create opportunities for our families,” she said, adding that meeting basic needs such as food assistance, health care, child care and housing will be crucial.
Economic analysts warned that New Mexico could be unable to rely on its oil and gas industry as the market continues to struggle amid the COVID-19 pandemic. Lease fees, royalty payment and taxes from oil and gas operations accounted for about 30 percent of the state’s budget in recent years, per a recent study from the Institute for Energy Economics (IEEFA) and Financial Analysis.
The oil and gas industry is in decline – and has been for at least a decade – according to a new economic report from the Institute for Energy Economics and Financial Analysis (IEEFA). This isn't the fault of the coronavirus, but the pandemic has helped underscore some of the industry's problems.
“We know that going into the pandemic, low-income children in our state and the children of color in our state were facing bigger challenges than many of their peers,” Wallin said. “What we see is that those challenges have been exacerbated, that COVID has really increased racial and ethnic disparities and disparities along income lines."
But according to New Mexico Voices for Children, 51 percent of adults in households with children in New Mexico have lost employment since March. “We were really surprised to see how high that number is, but we know it points to a weakness that already exists,” she said.
Instead, we should repeal the failed trickle-down tax breaks that were handed to the well-connected and big out-of-state corporations over the past two decades. Not only would this make us far less dependent on revenue from oil and gas, it would make our tax system more equitable for everyday working New Mexicans and more stable.
Nevertheless, New Mexico continues to improve in many of the indictors that measure child well-being, and Wallin credits the commitment of policy makers and “investments in programs to benefit kids and families.”
“The skeptics and the challengers are loud. But we have the facts and the families on our side,” Lujan Grisham said, calling for a renewed commitment to investing in “a system that continues its focus on children and families” during the 2021 legislative session.