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Harm to schools from Biden's pause on drilling leases may be overstated

Joseph Morton, CQ-Roll Call on

Published in News & Features

WASHINGTON — Think of the children.

That’s been a core message of the oil and gas sector, and its Capitol Hill allies, in attacking President Joe Biden’s pause on new oil and gas leases on federal lands.

Opponents of the move point to billions in tax revenues that flow from those operations into state coffers, where they help fund K-12 education. One advocacy group’s television spot dramatically depicts a family waiting for an approaching school bus that simply vanishes as it pulls up.

The potential impact on school funding could influence where the Biden administration takes its federal leasing policy and what, if anything, Congress does about it.

But the moratorium is likely to have less-than-dire consequences for education funding in the short term, even for those states most affected.

New Mexico is among those facing the biggest potential impact, as its state budget relies heavily on tax revenue from oil and gas operations on the federal lands that make up about a third of the state.

 

But analysts there upgraded their budget forecasts last week, with Taxation and Revenue Secretary Stephanie Schardin Clarke specifically addressing Biden’s executive orders.

“As these things stand right now we don’t expect them to have dramatic impact on oil or gas production in New Mexico for the short term,” Clarke told state lawmakers. She cautioned that the state is still seeking clarification from the federal government about the policies. And if the orders are extended or expanded, analysts said, that could change things.

But for now, the forecasts indicate flat oil and gas production.

Moratorium opponents have warned of big state revenue drops resulting from the pause. They point to a University of Wyoming study last year that predicted a drop of more than $8 billion over five years for tax revenues across eight states as a result of the moratorium. That study indicated New Mexico and Wyoming would see the biggest hits, with $946 million and $304 million in lost annual revenue, respectively. But critics have questioned the assumptions and methodologies underlying that assessment.

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