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Western states hit hard by budget deal's tweak to oil, gas royalties

It was barely noticed on Capitol Hill, but the budget deal that just passed both houses of Congress changes the split between the federal government and states when it comes to royalties in oil and gas collected on federal lands by 1 percent.

That may not sound like much, but it translates into a loss of $100 million for New Mexico and $415 million across the country over the course of the next decade, and western states will be hit the hardest.

“I don’t think it’s a good deal at all,” New Mexico State Treasurer James B. Lewis told New Mexico Watchdog Thursday. “New Mexico needs every dime, every nickel we can get. It looks like it’s permanent and it’s sad that we didn’t get a voice in it.”

States like New Mexico and Wyoming each have vast tracts of lands owned by the federal government where energy companies extract oil and gas. In the past, the feds and the states split the royalty payments 50-50, but under the provisions of the new budget deal, the split will shift to 51-49 in favor of the federal government.

The change will reduce New Mexico’s cut by about $10 million a year over the next 10 years.

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