New Mexico’s recent surge in oil and gas revenues has provided the state with an unprecedented financial windfall. However, much of this revenue has been allocated to expanding government programs and services, as evidenced by the Fiscal Year 2025 budget, which includes $10.5 billion in recurring general fund appropriations—a 9.9% increase from the previous year. While investments in education and healthcare have grown, albeit with limited impact, concerns persist about inefficiencies and wasteful spending in government initiatives.
In 2025, Alaska’s Permanent Fund Dividend amounted to $1,702 per eligible resident, with payments to be distributed in October.
This newfound wealth raises an important question: How can we ensure these revenues benefit all New Mexicans while fostering economic sustainability? Drawing inspiration from Alaska’s Permanent Fund Dividend (PFD), New Mexico should adopt its own Permanent Fund Dividend (NMPFD) program. Returning a portion of surplus revenues directly to residents can promote prosperity, reduce income inequality, and ensure that future generations share in the state’s natural resource wealth—all while maintaining fiscal responsibility.
Why New Mexico Needs a Permanent Fund Dividend
- Putting More Money in New Mexicans’ Pockets
- New Mexico ranks in the bottom 10% nationally in median household income at $62,125, leaving many families struggling to meet basic living expenses. A PFD program would provide direct financial relief to residents, significantly improving their quality of life.
- Even a modest dividend could transform low-income households, helping them afford groceries, healthcare, and housing essentials.
- For example, if New Mexico implemented a dividend similar to Alaska’s, families could receive annual payments of $1,000 to $2,000, providing a much-needed economic cushion.
- Igniting Local Economies
- Dividends put money directly into the hands of residents, who are likely to spend it on local goods and services. This increased consumer activity would stimulate New Mexico’s economy, creating jobs and boosting retail, hospitality, and education revenue.
- Families could also use dividends for long-term investments, such as home improvements or higher education, creating a ripple effect of economic growth.
- A Future-Proof Financial Safety Net
- A well-designed NMPFD program would leverage only surplus revenues, ensuring that the dividend is financially sustainable and does not compromise essential government services.
- New Mexico can safeguard the program against economic downturns and volatile energy markets by creating a financial reserve from oil and gas revenues. This reserve would act as a buffer, ensuring consistent payouts even in lean years.
- Ditching Mandates: A Smarter Way to Support Families
- The NMPFD offers a market-driven alternative to legislative initiatives like House Bill 11, the Paid Family and Medical Leave Act. HB 11 proposes mandatory payroll taxes and a state-controlled fund to administer paid leave, creating significant financial and administrative burdens for small businesses and their employees.
- The SPPI’s analysis of HB 11 highlights its potential to suppress wages, increase unemployment, and create inefficiencies through rigid government mandates. In contrast, a dividend program empowers individuals to use funds as they see fit, including saving for family or medical leave, without imposing additional costs on employers or creating unnecessary bureaucracy.
- By adopting the NMPFD, New Mexico can support families in a flexible, efficient, and economically sustainable way, avoiding the pitfalls of programs like HB 11.
The Failures of Status Quo Spending
New Mexico’s government has historically allocated surplus revenues to various programs, many of which have proven wasteful or ineffective. Public education, in particular, stands out as an example of poor outcomes despite massive investments. As the state’s largest school district, Albuquerque Public Schools (APS) exemplifies these failures, with per-student spending doubling over the past decade while academic performance remains abysmal. Fewer than 40% of students achieve reading proficiency, and only 26% are proficient in math. Meanwhile, administrative costs and inefficiencies drain resources that could directly benefit students.
Similarly, recent proposals such as Think New Mexico’s plan for a $2 billion sovereign wealth fund for healthcare continue the pattern of new government-controlled spending that often fail to address core problems effectively. Director of Think New Mexico, Fred Nathan, suggests using surplus revenues for another permanent fund, yet New Mexico’s track record shows that such funds usually grow disconnected from the immediate needs of residents. For example, similar initiatives have struggled to yield tangible results in education and conservation efforts despite substantial financial backing. A healthcare fund would likely face similar challenges, especially in the context of systemic inefficiencies and political hurdles surrounding Medicaid and malpractice reforms.
This approach fails to address residents’ immediate needs and creates long-term liabilities by expanding unsustainable spending patterns. Residents see their tax dollars funneled into systems that perpetuate underperformance, eroding public trust and delivering little return on investment.
Instead of increasing the size and scope of government, we propose redirecting a portion of these revenues directly to the people. Residents—not bureaucrats—are best positioned to decide how to spend their money.
Key Features of a Smarter Dividend Program
- Use of Surplus Revenues
- The NMPFD would be funded exclusively through surplus oil and gas revenues, ensuring it does not interfere with funding for critical services like education and infrastructure.
- A predetermined percentage of surplus revenues would be deposited into a dividend fund, creating a stable, predictable source of payments.
- Building a Financial Reserve
- A portion of the surplus would be set aside in a financial reserve to insulate the program from market volatility.
- This reserve ensures the program’s long-term sustainability, even during years of lower revenue.
- Equitable Distribution
- All eligible New Mexico residents would receive an equal share of the dividend, fostering a sense of shared prosperity and reducing income inequality across the state.
- Transparency and Accountability
- A transparent, non-partisan board would govern the program to ensure funds are managed responsibly and distributed equitably.
Why This Works
- Impact on State Investments
- Critics may argue that a dividend program would divert funds from infrastructure, education, or healthcare. However, the NMPFD would use only surplus revenues, leaving sufficient funds for these critical areas. Proper fiscal management ensures that state priorities remain fully funded.
- Volatility of Oil and Gas Revenues
- While oil and gas revenues are inherently volatile, the proposed reserve fund would stabilize dividend payouts. Additionally, the program’s flexible structure ensures that dividends adjust to reflect revenue trends without creating unsustainable obligations.
- Critiquing Think New Mexico’s Proposal
- Proposals like Think New Mexico’s healthcare permanent fund reflect a top-down approach that risks mismanagement and inefficiency. Instead of creating another bureaucracy, New Mexico should empower its residents directly through a dividend program that allows individuals to address their unique needs. While healthcare worker shortages are a critical issue, solutions should focus on structural reforms—not new funds that perpetuate the current system’s inefficiencies.
Why Now?
New Mexico is at a crossroads. The current oil and gas boom offers a rare opportunity to transform the state’s economic landscape. By adopting a permanent fund dividend, we can:
- Provide immediate financial relief to residents.
- Stimulate local economies.
- Ensure the state’s wealth benefits all New Mexicans, now and in the future.
The time to act is now. Delaying action risks squandering this once-in-a-generation opportunity to create a lasting legacy of shared prosperity.
Seizing the Moment for Lasting Prosperity
The New Mexico Permanent Fund Dividend represents a bold, forward-thinking approach to managing the state’s natural resource wealth. By empowering residents with direct payments, we can reduce poverty, stimulate the economy, and create a more equitable future—all while ensuring the program’s sustainability through careful fiscal management.
New Mexico has the chance to lead by example, showing how a state can balance resource development with economic justice. Let’s seize this opportunity to build a stronger, more prosperous New Mexico for generations.