Heinrich Introduces Legislation To Ensure Budget Certainty For Fossil Fuel Producing States

WASHINGTON –  U.S. Senator Martin Heinrich (D-N.M.), a member of the Senate Energy and Natural Resources Committee, introduced legislation to assist federal fossil fuel producing states like New Mexico as revenues decline in the coming years due to market forces and policies to curb carbon pollution. The Schools and State Budgets Certainty Act would provide a predictable transition for states, counties, and Tribes and give those governments time to transition their budgets to more sustainable and reliable sources of revenue. The legislation is cosponsored by U.S. Senator Ben Ray Luján (D-N.M.).

“The global energy landscape is undergoing a massive transformation, and states like New Mexico need to be ready,” said Heinrich. “The Schools and State Budgets Certainty Act will provide a predictable glide path for state, county, and Tribal governments to move away from their current dependence on federal fossil fuel revenues and allow a managed transition to more reliable sources of funding. If we make the right choices now and invest in new growth opportunities, we can put New Mexico and our energy veterans who have long worked to power our country in the best possible position to thrive.”

“The climate crisis has highlighted the urgent need to transition to a clean energy economy, and it’s crucial that states like New Mexico begin now to diversify our economy and create good-paying jobs. State, county, and Tribal governments need the time to transition their budgets without falling short, and the Schools and States Budgets Certainty Act provides the support they need to continue providing needed services,” said Luján. “I’m proud to partner with Senator Heinrich on this legislation to support New Mexicans and ensure that our state is at the forefront of a clean energy economy.”

Under the Mineral Leasing Act, the Mineral Leasing Act for Acquired Lands, the Indian Mineral Leasing Act, and the Gulf of Mexico Energy Security Act, states, Tribes, and counties receive revenue from mineral development within their borders or off their coast. States with significant federal mineral resources have come to rely on the state share of mineral revenues for a portion of their state budget revenue.

As the federal government implements policies designed to reduce greenhouse pollution from fossil fuels that causes climate change and transition our economy to net-zero energy sources, states that rely on federal mineral revenue will see a significant impact to their state budgets.

The Schools and State Budgets Certainty Act sets a baseline mineral revenue amount for each fiscal year based on a historical average of federal mineral revenue, declining by 5% each year. If the regular mineral revenue payment to a state, county, or Tribe would fall below the baseline amount for that year, an “energy transition payment” would be provided to make up the difference between the actual mineral payment and the calculated baseline. 

The legislation has received support from New Mexico Governor Michelle Lujan Grisham, the National Wildlife Federation, and state and local leaders.

“Senator Heinrich’s proposal is the right kind of approach for New Mexico and other western states with vast federal lands. This legislation would establish the kind of support we need to ensure our state revenues are protected as we continue to implement the important work of diversifying and expanding New Mexico’s economy. I look forward to working with the Senator and all of New Mexico’s delegation to get this proposal across the federal finish line,” said Governor Michelle Lujan Grisham.

“We have a responsibility to ensure that the transition to a clean energy economy leaves no one behind and expands economic opportunities. While it’s easy to talk about supporting the communities and energy workers who have powered our nation, it’s something else to provide a concrete plan to ensure that communities, schools, workers, and families are kept whole — and that’s exactly what Senator Heinrich has done,” said Collin O’Mara, president and CEO of the National Wildlife Federation. “We applaud Senator Heinrich for introducing the first serious proposal to ensure that the transition to cleaner sources of energy is fair for communities that depend upon fossil fuel revenues and prevent the elimination of essential services.”

“It’s far-sighted legislation that looks beyond New Mexico’s current over-reliance on oil and gas revenue to ensure we have adequate, stable sources of revenue to fund our schools and universities as we transition away from fossil fuels. The legislation is also flexible, which is important because we don’t quite know exactly what shape the transition will take,” said James Jimenez, executive director of New Mexico Voices for Children. 

A copy of the Schools and State Budgets Certainty Act is available here