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White House opens new front in sequester war, cuts $110 million in mineral payments to 35 states

By   /   March 27, 2013  /   9 Comments

A $26 MILLION HIT FOR NEW MEXICO: The federal government is cutting back energy and mineral payments to states by 5 percent. New Mexico Watchdog photo

A $26 MILLION HIT FOR NEW MEXICO: The federal government is cutting back energy and mineral payments to states by 5 percent. New Mexico Watchdog photo

By Rob Nikolewski | New Mexico Watchdog

The federal government has sent letters to 35 states, informing them it’s cutting federal mineral payments by about $110 million, or 5 percent, as part of the automatic spending cuts that started this month due to sequestration.

The Obama Administration hit New Mexico hard, with a whopping $26 million beanball. Only Wyoming, which figures to lose $53 million per year, will take a bigger hit.

The feds paid a total of $2.1 billion last year to states, revenue from energy and mineral production that occurred on federal land within those states.

Late Wednesday, New Mexico finance officials were still reluctant to talk to New Mexico Watchdog, saying they had just heard of the federal government’s decision.

But Wyoming’s governor says he thinks the decision is unfair and plans to fight the Obama administration, which made the announcement through the Department of the Interior.

Gov. Matt Mead said it’s “not acceptable” that the edict was made on short notice and has asked the Wyoming Attorney General for advice on what he can do to block the Interior Department’s action and has contacted Wyoming’s congressional delegation.

Spokesmen for New Mexico Gov. Susana Martinez referred New Mexico Watchdog to the Department of Finance Administration, where a spokesman indicated a comment may be forthcoming Thursday morning.

In the meantime, the chairman of the Roundhouse’s Legislative Finance Committee told Associated Press that while the $26 million hit represents less than 1 percent of the state budget, the news certainly isn’t welcome.

“As far as being able to ride the storm out right now in the short-term, obviously we can do that with the reserves that we are forecasting,” Sen. John Arthur Smith said, adding that the cut could end up becoming the “tip of the iceberg” of larger federal cutbacks to states .

The AP reports New Mexico should have a financial safety net of about $570 million at the end of this budget year, with those cash reserves roughly equal to 10 percent of the state’s spending.

Other states hit hardest include Colorado, which is losing $8.4 million, and California, which will get $5.5 million less.

Contact Rob Nikolewski at rob@nmwatchdog.org

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Since 2010, Rob Nikolewski has covered New Mexico politics and investigated fraud, waste and abuse in government. He also writes an opinion column in the Sunday editions of the Santa Fe New Mexican. Rob joined New Mexico Watchdog after 20 years in television as a sports anchor and reporter. He anchored at MSNBC, New York City, Boston, Pittsburgh, Phoenix, Reno and Boise, winning three regional Emmy awards along the way. He holds a master's degree in journalism from Northwestern University, a master's in public administration from Columbia University's School of International and Public Affairs and a bachelor's degree in journalism from Trinity University in San Antonio.

  • Just askin’

    If this is revenue from energy and mineral production that occurred on federal land within those states, does that mean the Feds have cut production as part of sequestration? Or are they just keeping the $$ for themselves?

  • Rick Caird

    That would be an interesting question. But, in any case, it is all part of the plot to inflict maximum pain from the very tiny cut in spending. Congress should act by cutting salary payments to bureaucrats who make these decisions.

  • BunnySlippers

    These are royalty payments from the oil and gas industry in return for actual production. How can this be part of sequestration?

  • http://twitter.com/ForrestSargente Forrest Sargente

    Cut the BATF, DHS, DEA, and TSA for starters. This administration cares more about its politics and party than the people and the country.

  • taxmaiden

    We’ve learned in the last few years that the govt can call it anything they want, i.e., the healthcare penalty is “not a tax”. But I agree, if these are Royalty payments, then the govt is in breach of contract.

  • Darren

    I would work to reclaim state land from the fed that was probably just taken as a land grab in the first place without proper compensation. Then sell the resources independently. It’ll end up in court but you could tie it up in court for years and play this game their way…dirty.

  • notalib

    Obama the man-child cutting and punishing where it hurts the most! Typical. Just remember, there were no cuts with sequestration. There was only a reduction in the rate of growth. The federal government will still have a larger budget than last year. It WILL receive more money–not less. All lies on the part of the administration.

  • mike

    Well, the land probably was taken as a land grab by the feds. They took it away from native americans.

  • Nmandel

    This is the beginning. Because our elected representatives on both sides cannot come to common sense budget compromise, the unintended consequequences of the sequestration, whether fair, logical or ill-prepared will continue to advance in unexpected and surprising ways. Be prepared.

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