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Audit: NM water project funding is fragmented

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SANTA FE, N.M. (AP) — New Mexico needs to better coordinate its financing of water projects and establish a long-term statewide capital improvement plan for addressing water infrastructure needs, according to a legislative audit report released Thursday.

The audit by the staff of the Legislative Finance Committee said there are seven financing programs that operate independently and they’ve provided about $583 million for projects since 2002. More coordination would maximize the financing available to the state, cities, counties and tribal governments.

Auditors said programs “compete for the same customers” and a “wasteful duplication of effort may exist because funding agencies’ purposes overlap.”

The report recommended the Legislature establish one interagency committee to coordinate water program financing and said there should be a single application process for local governments and others seeking assistance.

The largest portion of water project financing, almost $250 million in the past decade, came from the Water Trust Board. It receives an annual share of proceeds from bonds backed by oil and gas production taxes and a yearly allocation from a trust fund, which auditors said could be depleted within 19 years.

The Legislature has directly financed $151 million in water projects since 2002. However, auditors recommended that lawmakers fund water projects only when other loan and grant programs can’t provide the money.

Gov. Susana Martinez recently proposed that about $112 million, or 60 percent of next year’s available capital improvement financing, be earmarked for water projects. The governor will need the approval of the Legislature for that to happen, however.

Auditors said most water project financing is made available as a grant, and that has created problems for the state’s loan programs.

“The availability of grant funds directly restricts the number and quality of applications to existing state revolving loan fund programs, because the hope of obtaining a grant all but eliminates the desire of most communities to apply for a loan,” auditors said.

The report said the state’s drinking water revolving loan fund had the highest percentage of unspent federal grant money in the nation — about $37 million or nearly a third of its grants.

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