Sen. Martin Heinrich announced Thursday plans to introduce legislation that would help areas that depend on revenue from fossil fuels maintain balanced government and education budgets as the country moves toward a clean energy economy.
Known as the Schools and State Budgets Certainty Act, the bill would provide funding to offset the loss of revenue if money from fossil fuel extraction drops. The bill would create a baseline minimal revenue for governments based on the historical average revenue the governments received from federal minerals. If the revenue drops below the baseline, the governments would receive an energy transition payment to offset that loss.
These payments will be made to eligible states, counties and tribes and would provide some budget certainty during the transition away from fossil fuels.
The baseline will decline by 5 percent annually, which Heinrich said will prevent governments from becoming dependent on the energy transition payments.
“It’s not a path to dependence, it’s actually a path to independence,” he said in a press conference. “It’s also not a substitute for a economic strategy in this new economy.”
Heinrich, a Democrat from New Mexico, highlighted the importance of fossil fuel extraction to the state budget. He said at times the revenues from federal oil and gas production make up more than 40 percent of the state’s budget and the education sector is especially dependent on these funds.
At the same time, he emphasized that the boom and bust cycle of oil and gas can create problems.
“We’ve always known that relying on this boom and bust industry was unsustainable,” Heinrich said.
And there is growing demand for clean energy amid the climate crisis.
“We have an imperative to eliminate the carbon pollution that is already creating catastrophic disruptions and impacting public health,” Heinrich said.
Heinrich said the bill would provide a predictable glide path for states, counties and tribal governments as they transition away from the dependence on fossil fuel revenues.
He said the bill is just one piece of the puzzle.
“We need to be honest about the fact that this transition will not be easy for many of our fellow New Mexicans who have worked to power our economy, supported their families in careers in the traditional fossil fuel industries,” Heinrich said.
The bill will be introduced next week.