The Severance Tax Permanent Fund (STPF) was created by the New Mexico Legislature in 1973, as a way to save and invest the severance taxes not being used that year to bond capital projects. The taxes originate from oil, gas and other natural resources as they were taken (severed) from the state.
Voters later approved constitutional protections for the STPF against legislative appropriation from the corpus of the fund, which coupled with investment returns, allowed the fund to grow. The STPF annually distributes 4.7% of its 5-year average, or about $200 million per year to the state’s general fund.
Combined distributions from the Permanent Funds essentially deliver, on average, about $1000 in value annually for every household in New Mexico. Without the distributions produced by these Funds every year, New Mexicans would face much higher taxes, a significant reduction in government services, or both.