The New Mexico Economic Development Department (EDD) released its 2024-25 strategic economic plan, “Empower and Collaborate: New Mexico’s Economic Path Forward,” last week. This marks a pivotal moment in the state’s approach to economic development. The plan offers steps New Mexico can take to diversify its economy away from reliance on natural resource extraction—providing a framework for leaders in other resource-rich areas to follow.
The challenges of managing a fossil fuel economy
New Mexico is rich in oil, and by some measures—such as gross state product, a measure of the state’s total economic output—oil exports appear to drive economic growth. But outside the energy industry, the state faces many challenges, including high wealth inequality and low wages. Oil exports are not lifting all boats.
This paradox is not uncommon for places reliant on fossil fuel production as an economic driver. Economic development becomes narrowly focused on boosting the fossil fuel economy, which crowds out other areas. Amid rising oil and gas revenues, New Mexico has increased spending and lowered other taxes. These decisions have decoupled the state’s revenue structure from the underlying economy, leaving the state overly reliant on fossil fuel revenues to pay for services.
A framework for resource-rich states: Invest resource wealth in public assets and capacity
The new “Empower and Collaborate” plan deserves the attention of economic development leaders across the country. The plan offers a forward-thinking model for how New Mexico can build a resilient and diverse economy in addition to the state’s oil and gas wealth. It was developed through deep engagement with New Mexicans and focuses on building capacity in rural communities; diversifying economies that have lost coal mines and power plants; and helping cities foster the partnerships, infrastructure, and assets necessary to grow existing businesses and industry clusters. The idea driving the new plan is that public revenue should be spent on things that have proved to drive business growth, such as access to skilled workers; quality infrastructure, including roads, broadband, energy reliability, and utilities; and quality of life for workers, including good schools, housing, health care, and access to recreation and nature.
The plan includes several key themes that will enable it to do so.
Unlike past iterations of the “Empower and Collaborate” plan, which were developed by external consultants, this year’s plan was crafted in-house by EDD staff, ensuring a deeper alignment with the needs and aspirations of New Mexicans. The planning process included extensive engagement with workers, communities, and experts across the state—ranging from coal workers in the San Juan Basin to Tribal leaders and regional development organizations—which allowed the creation of a road map that is truly reflective of local priorities.
At its core, the plan represents a shift away from traditional, narrow, sector-based job creation strategies and toward addressing structural economic challenges that affect all sectors. This includes building capacity in rural areas, bolstering site readiness across the state, supporting regions transitioning away from coal, and integrating fiscal policy with economic development. These themes are essential to fostering sustainable growth across New Mexico’s economy.
The plan represents a shift away from traditional, narrow, sector-based job creation strategies and toward addressing structural economic challenges that affect all sectors.
A key strategy highlighted in the plan is saving and investing fossil fuel revenues to build a more stable and resilient fiscal future—a model that sets New Mexico apart from many resource-dependent states. The New Mexico State Investment Council now projects that revenue from New Mexico’s permanent funds will exceed annual oil and gas revenues by 2039, an achievement made possible through smart fiscal policies. Those permanent funds are also being used to stabilize revenues, fund key public services, and spur economic development—including through financing climate technology and renewable energy companies in New Mexico, creating additional jobs in the energy sector and building a more reliable and lower-cost energy system in the state.
Conclusion
New Mexico’s economic future will not be transformed by short-term tax cuts and subsidies but rather though deliberate investments in long-term resilience and strategic planning. The “Empower and Collaborate” plan reflects a comprehensive approach that acknowledges the complexities of economic transformation and prioritizes investments that will yield lasting benefits for communities across the state. By aligning fiscal policy with economic development, investing in workforce capacity, and ensuring that rural and energy communities are not left behind, New Mexico is setting a national example for how to build a more prosperous and sustainable economy.