New Mexico Gov. Michelle Lujan Grisham on Monday vetoed legislation to fund $50 million in a variety of projects and instead has earmarked it for the general fund to guard against low crude prices and the impact of the coronavirus.
The Permian Basin, which New Mexico shares with Texas, has become a major contributor to state revenue, providing a record $3.1 billion from the oil and natural gas sector last year, almost one-third more than in 2018.
Lujan Grisham said she vetoed state Senate Bill 232 primarily to enhance the state’s reserve capacity in light of the spreading coronavirus, officially Covid-19, as well as the painful downturn in oil prices after the Organization of the Petroleum Exporting Countries, aka OPEC, and Russia launched a price war.
“Revenue projections and the state’s ability to weather potential downturns are always primary concerns of mine,” Lujan Grisham said. “That’s why I have called for a 25% reserve target in both of my executive budget recommendations, and this year succeeded and secured what will be the highest percentage of reserves in our state’s history…”
“We do not yet know the degree to which Covid-19 and declining oil prices will impact our state’s economy,” said the governor. “Given this uncertainty, I bear a heightened obligation to ensure that all significant expenditures constitute a demonstrably sound investment in New Mexico.”
The senate bill “falls short of that mark, because it appropriates nearly $50 million to road projects whose scope and total cost is often unclear. Such spending is not warranted given the attendant public policy considerations.”
The veto allows the monies to flow back into state reserves, “which helps counteract the potential impact of fluctuations in the oil market,” Lujan Grisham said.