Feds withhold mineral royalties to states, citing sequester

Michael Bastasch

The Obama administration sparked outrage when it announced on Monday that it was withholding $110 million mineral royalty payments that are owed to states and counties due to the sequestration.

“The Budget Control Act of 2011, passed by Congress, mandates across-the-board, automatic 5.1 percent sequester reductions,” said Office of Natural Resources Revenue spokesman Patrick Etchart. “By law, revenue payments to states are not exempt from the sequester. Cumulatively, approximately $110 million will be withheld from states and counties where energy production occurs on federal lands during the remainder of the current fiscal year.”

Western states will feel the brunt of the cuts in royalty payments — 99.3 percent of it, according to the Congressional Western Caucus. This is money that goes towards financing projects such as K-12 education, highways, community colleges, and flood protection.

“The Federal government is trying to bow out of their commitments to states after failing to cut wasteful spending within the government,” said New Mexico Republican Rep. Steve Pearce. “Instead of cutting these critical payments to the state, why aren’t we cutting the President’s golf outings or luxurious government conferences? American families carry the responsibility of living within their means and honoring their commitments- the federal government should too.”

The federal government owns about 640 million acres — 28 percent of the land in the U.S. — with most of it in the West and Alaska.
Wyoming will see $53 million in royalties withheld and Republican Gov. Matt Mead denounced the decision, saying that withholding revenues owed by law “would be taking someone else’s property.”

Under federal law, Wyoming is entitled to 50 percent of mineral leasing revenues from federal lands.

“The opportunity to take a lot more of what the states are properly owed proved to be too tempting to the federal government,” said State Treasurer Mark Gordon. “We are using every means necessary to make sure our state is made whole.”

New Mexico is also being hit by the sequester, losing $26 million in royalties. In the short term, the state has enough reserves to offset the cuts, but state leaders are still concerned.

“We’re always concerned about it being the tip of the iceberg,” said state Sen. John Arthur Smith.

“We are looking into this decision by the Department of the Interior and exploring options to see if it can be reversed, but the larger issue is the need to replace the draconian spending cuts of sequestration with a balanced approach to reducing the debt and deficit,” said New Mexico Democrat Sen. Tom Udall.
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