Public Administration ETDs

Publication Date



The Oil and Gas Accounting Commission has been identified as an efficiently operating taxation agency that was established in 1959, after an in-depth study of a special taxation problem involving a major tax paying industry in New Mexico. The Commission was established during a decade of phenomenal growth in New Mexico which saw its population increase by 39.6 per cent, and the revenues collected by its Bureau of Revenue increase by 123.0 per cent. One of the major reasons for the creation of the Commission was the Legislature's apparent desire to solve some of the revenue collecting problems by segregating specific revenue collecting activities into smaller, specialized organizations. Currently, New Mexico is faced with a different problem which involves increasing demands on its fiscal resources to finance expanded educational, health, and social services programs. The State's population growth during the 1960's was minimal. In addition, New Mexico's tax structure is regressive. The combination of these factors indicates that its current tax structure will not produce the additional revenue to pay for the expanded programs. Before the State imposes new or increased taxes to finance its expanding programs, it must assure itself that it is currently receiving all taxes due from existing tax laws, and that it is obtaining these taxes in the most efficient manner. It is the purpose of this thesis to analyze and review the Oil and Gas Accounting Laws, the Oil and Gas Accounting System, and the results of the operations of the Oil and Gas Accounting Commission, to determine if it is a competent and efficient taxation agency, and, if so, if its operation is based upon certain fundamentals that can be used as a model for the development of other applications to improve New Mexico's over-all taxation program. This study determined that the Oil and Gas Accounting Laws had established a solid framework upon which a reliable and effective taxation system could be built. The Commission installed a well designed and simplified tax reporting system that combined the reporting of the taxable value and four taxes and State royalty due from a taxing unit into one self-checking line entry, the correctness of which was independently verified in the Commission's Santa Fe office. In developing the system, the Commission installed a modern computer based tax return analysis system which determines for each taxing unit, for each month, if both the seller and purchaser of taxable products have reported each taxing unit; if the transaction values reported by the two parties are in agreement; if the deductions taken in arriving at taxable value are allowable; and if the proper amount of tax and State royalty has been paid. Any reporting errors detected in the analysis are quickly brought to the attention of the taxpayer who prepares a corrected report and pays any additional tax and/or State royalty due. It was also determined that the Commission administered, collected, and distributed all taxes and State royalty under its jurisdiction for less than ½ of 1% of its collections for each year. The most efficient operating period for the Commission was the year ended June 30, 1970, when it collected $63,158,000 at a total operating expenditure cost of $241,400, for a cost of $3.82 to collect $1000. Based upon this study, it is the writer's opinion that the success of the Oil and Gas Accounting Commission is due to:

  1. A well written, well planned, easily understood compatible set of tax laws with uniform provisions which established a sound framework upon which an effective taxation system could be built.
  2. A well planned, well documented, streamlined accounting system which makes maximum utilization of the latest technological advances in the processing of data.
  3. Industry assistance in planning the laws, assisting in the design of the accounting system, and in writing the reporting instructions. The industry involvement resulted in increasing their desire to see that their system worked.
  4. The Commission having the flexibility of having its own independent computer system.
  5. Maintaining, with minimum turnover, a competent group of well trained employees to administer the laws.
  6. The consistent acceptance and support of the Governor and Legislature.

Most of the mentioned items are basic to proper tax administration. The unusual thing about the Oil and Gas Accounting Commission is that each of these factors has been strongly present for a number of years. If New Mexico is to meet its fiscal needs with a minimum of tax increases or new taxes, we must develop other taxation systems in accordance with the pattern established by the Oil and Gas Accounting Commission. It is the author's opinion that the patterns established by the Oil and Gas Accounting Commission should be utilized in the codification of a uniform statewide Tax Administration Act, and in updating old taxation laws and operating systems. In addition, other tax and royalty collection duties should be transferred to the Oil and Gas Accounting Commission to make better use of its expertise and potential and to help balance the current workload between New Mexico's two major tax collection agencies. When each of New Mexico's major tax collecting agencies are operating on a highly efficient level, a long-term goal of gradual and orderly consolidation of tax agencies should be considered.

Degree Name

Public Administration

Level of Degree


Department Name

School of Public Administration

First Committee Member (Chair)

John Mace Hunger

Second Committee Member

Albert H. Rosenthal

Third Committee Member

David Jones



Document Type