Land Office Raising Record Revenues

Land office distribution

In the last few years, the New Mexico State Land Office has been breaking records, raising the highest amounts of revenue in state history.

The office raised $817 million during the 2013 fiscal year. This amount exceeded the revenue for 2012, which was $653 million, which also was a record.

The new fiscal year has been a strong one for the office so far as well. According to the land office, this August was the third-highest revenue-producing month in the history of the office. $75 million were earned, which is $4 million shy from the highest record of $79 million, the amount produced last December.

New Mexico has 13 million subsurface acres and 9 million surface acres assigned as trust land. Trust land generates revenue for beneficiaries including UNM.

There are 22 beneficiaries in New Mexico. Each gets assigned a piece of trust land and whatever income is produced from that land goes to the assigned beneficiary.

The land commissioner is in charge of generating the most profit possible for the beneficiaries while still protecting the long-term health of the land.

Public school districts across the state are the beneficiaries with the largest share with trust land more than 75 percent of surface acres, and 77 percent of subsurface acres.

And with every dollar becoming more important in a shaky economy, districts depend on their funding to continue operating day-to-day.

“All funding is essential to the daily operations of our District,” said Randy Piper, superintendent of the Lordsburg Municipal Schools. “As our enrollment drops, and costs continue to rise, every dollar is extremely important for the education of our students.”

Land office officials also work closely with the Forest Service and is known for sponsoring projects with groups such as the Cibola National Forest.

“The folks at the State Land Office work really hard at supporting the projects we have going on,” said Matt Reidy, spokesman for the Cibola National Forest.

“They are assisting us with fencing work in and around Bluewater Creek in the Zuni Mountains,” Reidy said. “They’re also financing some restoration work near the south side of Bluewater Lake, so that assistance is very important and greatly appreciated.”

The revenue raised by the land office goes to one of two places: either the land grant permanent fund or the land maintenance fund.

The permanent fund revenue comes from non-renewable resources such as oil, gas and mineral extraction. This revenue is invested and a percentage of those earnings is paid to the beneficiaries.

The revenue from the land maintenance fund comes from renewable sources such as grazing, rights of way and leases. This revenue is distributed directly to the beneficiaries.

The State Land Commissioner’s 2012-2013 Annual Report shows that in the 2013 fiscal year, the land office distributed over $584 million to beneficiaries. 94 percent of that revenue was earned by the oil and gas sector.

Every month, the land office selects pieces of land and hosts an oil and gas lease sale for those pieces. The bids earned go directly to beneficiaries.

A lease usually gives a company five years to drill a well and establish production. The lease lasts as long as the well is producing oil and/or gas.

Royalty rates, which are set by the State Land Office, are 16.66 percent or 18.75 percent. The rate depends on how promising an area is. Last year, these royalties amounted to more than $726 million.

Land commissioner Ray Powell says he thinks his office has been going in the right direction.  He is the state’s longest-serving land commissioner, having served back-to-back terms from 1993-2002, and is currently looking for re-election.

Powell on Nov. 4 faces Aubrey Dunn, a rancher who describes himself as “more business-oriented” than Powell. Dunn says the Land Office could generate even more money by being more aggressive in maximizing oil and gas drilling on the state.