New Mexico governor releases $10.9 billion budget proposal, a 7% increase over last year - By Patrick Lohmann, Source New Mexico
Gov. Michelle Lujan Grisham will push the Legislature to boost spending on housing, behavioral health, water protection and child welfare in the upcoming session, according to a proposed $10.9 billion budget her office released Thursday afternoon.
The budget would be the biggest in state history and a 7% increase over the $10.2 billion budget lawmakers enacted earlier this year, which was also a record. Lawmakers in each chamber will consider her recommendation, plus one from the Legislative Finance Committee, as they put forth a spending plan across the 60-day legislative session beginning in January.
The governor’s budget proposes at least modest increases for most state agencies. The biggest suggested increase, of 20.5%, is for the Office of the State Engineer, which would receive $41.5 million this fiscal year. The office is in charge of administering the state’s water resources, which includes fighting to preserve the state’s water supply in litigation with other states.
The state Environment Department would get no increase, according to the governor’s proposal. The 26-page proposal does not explain why.
The governor touted her proposal as a way to expand needed services for children, along with those suffering with homelessness, drug addiction or mental illness, while also maintaining 30% in reserves. It also seeks to spur a transition to cleaner energy and increase infrastructure investments.
Three other departments would see roughly 10% increases in the governor’s proposal: The Children, Youth and Families Department, which would get $286.4 million; the Health Care Authority, which would get $2.2 billion; and the Energy, Minerals and Natural Resources Division, which would get $44.7 million.
The proposal comes amid several years of huge increases in collections from oil and gas extraction in the Permian Basin, one that economists say is coming to an end. The governor said her proposal strikes the right balance to prevent overspending while meeting the state’s needs.
“Over the past few years, we have maximized the historic fiscal windfall by investing every dollar into programs, services, and solutions that benefit all New Mexicans,” she said in an introductory letter on the budget. “At the same time, we’ve made prudent investments to ensure immediate and long-term benefits for future generations.”
Among many other issues in the session, lawmakers are expected to seek a grand bargain on crime reform, an area where the legislative and executive branches butted heads earlier this year. Lujan Grisham is a Democrat, and both chambers have large Democratic majorities.
On the crime front, the governor is proposing $20 million for opioid treatment in statewide prisons, plus several million dollars apiece for law enforcement vehicles, security upgrades at courthouses, and a commission tackling organized crime.
Regarding housing, the governor’s newly created Office of Housing is seeking $2 million again to fund its operations, along with $100 million to address homelessness and provide down-payment assistance to first-time homebuyers.
Her budget proposal does not say whether she’s seeking that funding for her office or for independent authorities. Control of housing funds was also controversial in the session earlier this year, even as the Legislature made its biggest one-time investment in housing in history.
Feds temporarily withdraw new mining claims and leases in New Mexico’s Upper Pecos - By Danielle Prokop, Source New Mexico
U.S. Secretary of the Interior Deb Halaand paused new mining claims or leases for two years on 165,000 acres of public lands in northern New Mexico’s Upper Pecos watershed Thursday, starting a process that could shield the area from mineral extraction for decades longer.
The pause allows time for the Bureau of Land Management and the U.S. Forest Service to jointly seek a 20-year ban on new mining claims in the area, which encompasses federal land in San Miguel and Santa Fe counties.
Halting new mining claims and leases would secure the region’s water and air quality, cultural resources for the Pueblos of Jemez and Tesuque, maintain critical habitats and water for agriculture and communities, a press release from the Interior Department said.
The administrative action is the latest in a flurry of activity of approving solar and wind projects and land transfers to tribal governments in the waning days of President Joe Biden’s presidency.
New Mexico’s all-Democrat congressional delegation has introduced legislation for years seeking to permanently stop new mining in the region, which only Congress has the power to do. The most recent was S. 3033 brought by Democratic Sens. Martin Heinrich and Ben Ray Luján. The bill passed a crucial committee vote, but it’s future is uncertain.
Heinrich called the temporary protection a “major victory” for groups concerned about the area.
“The Upper Pecos Watershed has an unfortunate history of poorly managed mining and development projects that have put New Mexicans and our ways of life and cultures at risk,” Heinrich said in a written statement.
An important caveat is that already-existing mining rights are not impacted by the pause, meaning mining may continue in the area. The Interior Department’s pause does add another step for mining companies with rights to get approval – called a validity exam.
An Australian mining company, New World Resources, has proposed exploratory drilling in the Sangre de Cristo Mountains.
Their proposal includes the old Terrero mining operation and nearby deposits, which had a devastating spill in 1991, five decades after it closed and that New Mexico agencies are still cleaning up.
The Terrero project has not received any permits, yet, as federal decisions on their mining operations were delayed by the Hermit’s Peak-Calf Canyon fires. For any drilling to start, the plan still requires approval from federal and state agencies. The Stop Terrero Mine Coalition – which includes agriculture, local and tribal governments, conservation and hunting groups – said in 2023 they are concerned the project has more than 230 mining claims in the greater Pecos headwaters.
New Mexico economist: Don’t expect huge jump in oil production, even if Trump slashes regulations - Patrick Lohmann, Source New Mexico
Even if President-elect Donald Trump makes good on his promise to increase domestic oil production by slashing regulations and boosting new leases on federal land, a New Mexico state economist says that won’t necessarily mean a huge increase in production here.
To understand why, the chief economist at the Legislative Finance Committee said you have to look at the way big oil companies, which have consolidated in recent years through mergers and acquisitions, have approached new production in recent years.
Shareholders at publicly traded oil companies are increasingly focused on profits from steady, regimented oil production from existing wells, not spending capital in search of new, potentially unproductive wells, said economist Ismael Torres.
“It’s like this change in attitude that, rather than take the money to do more drilling – to get more market share, to get more production – they’re going to not be so big of risk-takers,” Torres told Source New Mexico. “They’re going to drill where they know that they can earn a profit.”
FIRST TRUMP TERM GIVES HINTS FOR SECOND
Torres and the Legislative Finance Committee, which makes budget recommendations to lawmakers. included that prediction in a new revenue estimate for lawmakers ahead of the 60-day legislative session, which will begin in January just as Trump is sworn in for his second term. The state is heavily reliant on revenue from oil and gas production: It contributed an estimated 35% of the state’s general fund balance last year.
In addition to predicting another big budget surplus for lawmakers, the 31-page revenue estimate tried to predict what Trump’s promised policies, including new tariffs and oil deregulation, could mean for the revenues in the nation’s second-biggest oil and gas producing state.
When it comes to tariffs, it’s anyone’s guess, Torres said. The incoming Trump administration has released so little detail that determining the impact of tariffs on consumers or industry is difficult, he said. But the behavior of oil companies in the Permian Basin during the first Trump term, and the LFC’s observations of the industry in recent years, allows the analysts to make an educated guess.
According to the federal Bureau of Land Management Statistics, New Mexico had about 7,570 active oil leases on federal lands as of 2023, the most-recent year for which data is available. That’s the second-highest in the country, behind Wyoming. There are also about 5,700 active leases on state lands, according to State Land Office data.
During the first Trump term, Torres said, oil companies took advantage of relaxed leasing requirements to secure more leases and permits on federal land, but that doesn’t mean they ever broke ground, he said.
Torres provided an industry analysis from Rystad Energy in January 2021, right after President Joe Biden took office, showing that two major producers, EOG and Devon, held onto about 1,100 horizontal drilling permits they obtained for the Delaware Basin in New Mexico between 2018 and 2020 without turning them into actual wells.
Torres’ interpretation of that is companies stockpiled permits while they could, anticipating that a new presidential administration would crack down on new permits, but never intended to immediately drill new wells.
Given the way the oil industry behaved the last time around, and shareholders’ new preference for steady profits over speculation, Torres said, he expects “business as usual” come January.
“The devil’s in the details,” he said. “But I am struggling to see what form it could take that would present a significant change in the current trajectory of production as it stands.”
STATE BUDGET INSULATED FROM OIL VOLATILITY
The current trajectory of oil production in New Mexico is a slowdown in growth and falling prices, following huge increases in production since 2017, according to the LFC report.
The state now produces a little more than 2 million barrels of oil a day, up from about 500,000 in 2017. But that huge year-over-year increase has already dropped, and it is expected to decrease even more in the next few years, from a 5% increase this year to 1.5% increases each fiscal year between 2027 and 2029.
Oil prices in New Mexico are also falling, from $78 a barrel, on average, last fiscal year to about $70 a barrel this fiscal year. They’re projected to reach $68 a barrel in fiscal year 2026, which begins in July. The LFC attributes that decline to reduced demand, growing supply and other economic conditions.
Between the reduced prices and reduced growth in production, the state expects overall collections to decrease over the next couple years. Analysts estimated the state generated $1.9 billion in oil and gas-related severance taxes this year, a decline of $64 million the previous year.
That would normally be very bad news, given the state’s reliance on oil and gas revenue. But lawmakers at a Monday meeting lauded the state’s approach to protect the general fund from volatility in the oil and gas industry, at least when it comes to creating a new budget early next year.
Revenue estimates show the state will receive $13.26 billion in revenue this fiscal year, which ends in late June. That estimate was revised upward since the last projections in August, when analysts estimated the state would get slightly over $13 billion. The new estimates mean the state will have about $900 million in “new” money to spend in next year’s budget, which is the total expected revenues minus last year’s spending.
Beginning in 2023, the state began capping the amount of oil and gas severance tax revenues that would end up in the general fund, an effort to invest a boon of oil revenue and insulate state operations from future price slumps.
As a result, the reduction in revenue only hits two reserve funds, like the Early Childhood Trust Fund and the Tax Stabilization Reserve, rather than reducing the general fund balance. Reducing the general fund balance could mean cutting the recurring funding departments use to pay staff or fund operations, along with nixing one-time appropriations.
The governor and the Legislature have agreed to tackle crime-related policies in a single piece of legislation, and the governor is calling for a big one-time boost in behavioral health spending.
City Council to reconsider proposal requiring landlords to provide cooling for tenants - Elizabeth McCall, City Desk ABQ
An Albuquerque city councilor is bringing back her proposal to require landlords to install cooling systems for tenants after it was shot down in a City Council committee — this time to be considered by the full council.
Councilor Tammy Fiebelkorn’s proposal would amend the city’s housing code to require cooling systems for residential rental properties. The code currently only requires heating capabilities, but Fiebelkorn’s proposal says cooling is essential with increasing temperatures, which can cause serious health issues.
“[Cooling] is a basic human right,” Fiebelkorn said. “We have people in our community who are suffering…They’re also facing medical problems because of this oversight in our laws that are really old and need to be upgraded. I am not willing to give up on that, because a few councilors were unwilling to have the conversation about it.”
After hearing from her constituents during the summer who said their homes were too hot, Fiebelkorn called the city’s code enforcement and was shocked to learn there is no requirement for providing cooling. She said there is “no denying” the city is experiencing hotter, longer-lasting temperatures.
“They’re living in apartments or in single-family homes, and they’re just baking inside of these places,” Fiebelkorn said. “We need to make sure that we’re taking care of some of our most vulnerable, low-income residents, who are facing some pretty serious health impacts of it being 100 degrees inside their home.”
During the Finance and Government Operations Committee’s (FGO) Nov. 25 meeting, some councilors disagreed with certain provisions and sent it to the full council with a “do not pass” recommendation. But during the council’s Dec. 2 meeting, Fiebelkorn successfully revived the bill to be voted on during the Dec. 16 meeting.
During the November committee meeting, Councilor Dan Champine said he was concerned there would be an increased electrical cost to tenants and cause an “unforeseen burden on the renter.” Fiebelkorn countered by saying running water costs money but “we do not use the fact that people have to pay for running water as an excuse to not provide it for them.”
The bill originally proposed only rental properties would be required to provide cooling, but the committee approved an amendment to require it for all housing units. Fiebelkorn said she was not against the change but is “not super worried about someone who can afford to buy a house.”
“I think that’s a very different situation than low-income renters,” Fiebelkorn said. “What I am interested in is helping tenants who have excessive heat in their homes. That’s my only goal.”
There was also some confusion about the bill not permitting evaporative coolers, which Fiebelkorn said is not the case, and the intention is to ensure each rental unit has some sort of permanent cooling system.
Fiebelkorn said she was “extremely disappointed at the FGO meeting” but was happy councilors were willing to bring it back for more discussion and is planning on proposing an original version of the bill with some clarifications.
NM Higher Education Department proposes fund to help feed and house students in need - By Nash Jones, KUNM News
For New Mexico college students, paying tuition and getting good grades aren’t the only things they have to think about. Most are also facing food and housing insecurity, according to a recent survey. Now, the state’s Higher Education Department is including these basic needs in its efforts to see more students graduate.
The statewide Basic Needs Survey showed 58% of New Mexico college students don’t always know where their next meal is coming from and 62% have had unstable housing.
In its budget request to lawmakers, the department proposes creating a $4 million Student Retention Fund to support campuses in building out nutrition and shelter programs.
University of New Mexico Professor Dr. Sarita Cargas directs the Basic Needs Consortium, a group born out of the survey project, which recently toured campuses across the state. She said every one of them was doing something to address the issue, but that “only a coordinated response will get at systemic needs.”
The department pointed to a recent analysis showing 3,500 more New Mexico college students would see graduation day if they consistently had enough to eat and somewhere to rest their heads.
New Mexico receives millions in federal criminal justice grants - By Nash Jones, KUNM News
New Mexico’s congressional delegation announced Wednesday a long list of projects that will get a boost from nearly $3.5 million in federal criminal justice funding.
The Bernalillo County District Attorney’s Office will receive the biggest infusion, with $1.5 million going to its Sexual Assault Kit Initiative. The group of attorneys, investigators and victim advocates is working through Albuquerque’s backlog of rape kits, building cases and supporting survivors.
The investment from the Edward Byrne Memorial Justice Assistance Grant will also help equip law enforcement agencies across the state. Rio Rancho plans to buy more traffic cameras that recognize license plates, while Valencia County will purchase rugged laptops called Toughbooks and the City of Clovis will spend its share on officer recording equipment.
The only state agency to receive a piece of the pie, the Children, Youth and Families Department, will put around $650,000 toward support programs for young people involved in the Juvenile Justice System.
Meanwhile, some of the funds will go towards related research. The University of New Mexico will get $400,000 to look at improving parole and reentry for people given long or life sentences as juveniles.
Albertsons sues Kroger for failing to win approval of their proposed supermarket merger - By Dee-Ann Durbin, AP Business Writer
Kroger and Albertsons' plan for the largest U.S. supermarket merger in history crumbled Wednesday, with Albertsons pulling out of the $24.6 billion deal and the two companies accusing each other of not doing enough to push their proposed alliance through.
Albertsons said it had filed a lawsuit against Kroger, seeking a $600 million termination fee as well as billions of dollars in legal fees and lost shareholder value. Kroger said the claims were "baseless" and that Albertsons was not entitled to the fee.
"After reviewing options, the company determined it is no longer in its best interests to pursue the merger," Kroger said in a statement Wednesday.
The bitter breakup came the day after two judges halted the proposed merger in separate court cases. U.S. District Court Judge Adrienne Nelson in Oregon issued a preliminary injunction Tuesday blocking the merger until an in-house judge at the Federal Trade Commission could consider the matter.
An hour later, Superior Court Judge Marshall Ferguson in Seattle issued a permanent injunction barring the merger. Ferguson ruled that combining Albertsons and Kroger would lessen competition and violate consumer-protection laws.
The companies could have appealed the rulings or proceeded to the in-house FTC hearings. Albertsons' decision to pull out of deal instead surprised some industry experts.
"I'm in a state of professional and commercial shock that they would take this scorched earth approach," said Burt Flickinger, a longtime analyst and owner of retail consulting firm Strategic Resource Group. "The logical thing would have been for Albertsons to let the decision sink in for a day and then meet and see what could be done. But the lawsuit seems to make that a moot issue."
Albertsons is unlikely to find another merger partner because it has significant debt and underperforming stores in most of its markets., Flickinger said. Consumers will feel the most immediate impact of the deal's demise, he said, since Albertsons charges 12% to 14% more than Kroger and other grocery rivals.
"They had so much debt they had to pay it off it's reflected in their pricing and promotional structure," Flickinger said.
Albertsons CEO Vivek Sankaran testified during the federal hearing in September that his company might consider "structural options" like laying off employees, closing stores and exiting certain markets if the merger with Kroger didn't go through.
"I would have to consider that," he said. "It's a dramatically different picture with the merger than without it."
But in a statement Wednesday, Sankaran said Albertsons would "start this next chapter in strong financial condition with a track record of positive business performance." In the company's most recent quarter, Albertsons' revenue rose 1% to $18.5 billion and it reported $7.9 billion in debt.
Kroger said it would also move forward in a strong financial position, with revenue down slightly to $33.6 billion in its most recent quarter. The company announced a $7.5 billion share buyback program Wednesday after a two-year pause.
Kroger and Albertsons first proposed the merger in 2022. They argued that combining would help them better compete with big retailers like Walmart, Costco and Amazon, which are gaining an increasing share of U.S. grocery sales. Together, Kroger and Albertsons would control around 13% of the U.S. grocery market. Walmart controls around 22%.
Under the merger agreement, Kroger and Albertsons — who compete in 22 states — agreed to sell 579 stores in places where their locations overlap to C&S Wholesale Grocers, a New Hampshire-based supplier to independent supermarkets that also owns the Grand Union and Piggly Wiggly store brands.
But the Federal Trade Commission and two states — Washington and Colorado — sued to block the merger earlier this year, saying it would raise prices and lower workers' wages by eliminating competition. It also said the divestiture plan was inadequate and that C&S was ill-equipped to take on so many stores.
On Wednesday, Albertsons said that Kroger failed to exercise "best efforts" and to take "any and all actions" to secure regulatory approval of the companies' agreed merger transaction.
Albertsons said Kroger refused to divest the assets necessary for antitrust approval, ignored regulators' feedback and rejected divestiture buyers that would have been stronger than C&S.
"Kroger's self-serving conduct, taken at the expense of Albertsons and the agreed transaction, has harmed Albertsons' shareholders, associates and consumers," said Tom Moriarty, Albertsons' general counsel, in a statement.
Kroger said that it disagrees with Albertsons "in the strongest possible terms." It said early Wednesday that Albertsons was responsible for "repeated intentional material breaches and interference throughout the merger process."
Kroger, based in Cincinnati, Ohio, operates 2,800 stores in 35 states, including brands like Ralphs, Smith's and Harris Teeter. Albertsons, based in Boise, Idaho, operates 2,273 stores in 34 states, including brands like Safeway, Jewel Osco and Shaw's. Together, the companies employ around 710,000 people.
Kroger sued the FTC in August in federal court in Ohio, claiming that the federal agency's in-house administrative hearings were unlawful because the FTC was also able to challenge the merger in federal court in Oregon. In paperwork filed Wednesday, the FTC said it expected to update the court on its next steps in that case by Dec. 17.
In Colorado, which also sued to block the merger, Attorney General Phil Weiser said Tuesday that he still was awaiting a decision from a state judge. In that case, Colorado also was challenging an allegedly illegal no-poach agreement Kroger and Albertsons made during a 2022 strike.
Shares of Albertsons fell 1.5% Wednesday, while Kroger's stock was up 1%.