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Massive NM capital outlay bill could test oversight

A car stops at a portable traffic light signal on NM 82 east of Artesia recently. The state budgeted $925M this year for infrastructure. (Greg Sorber/Albuquerque Journal)

Copyright © 2019 Albuquerque Journal

SANTA FE – A $925 million public infrastructure bill funded by an unprecedented state surplus could be a boon for New Mexico’s economy, with dollars earmarked for aging state buildings, university projects, road improvements and Spaceport America.

But there’s also concern about the state’s ability to ensure the money is properly spent, given limited staffing levels and a history of misspent capital outlay funds – including recent allegations that the former Torrance County sheriff embezzled money intended for new vehicles.

Rep. Patricia Lundstrom, D-Gallup, said many local governments want the allocated funds as quickly as possible, but she expressed doubt about the state’s ability to adequately audit the capital outlay windfall.

“My concern is making sure it gets spent in a timely manner and making sure there’s oversight on every level,” said Lundstrom, chairwoman of the House Appropriations and Finance Committee. “My greatest fear is that we have a lot of projects that aren’t moving come next January.”

Already, the state had a backlog of roughly $737 million in appropriated but unspent capital outlay funding as of March – a figure that represents more than 1,600 projects statewide.

And several state agencies tasked with overseeing infrastructure spending are dealing with staffing limitations after several years of budgetary belt-tightening, according to the Legislative Finance Committee.

For instance, the Public Education Department’s capital outlay bureau has only two full-time employees, while the Department of Finance and Administration’s Local Government Division – that will oversee more than 460 new projects – has seven staff vacancies out of 41 budgeted positions.

Debbie Romero, a DFA deputy secretary and state budget director, said Tuesday that she has directed state agencies with capital outlay oversight duties to review spending of this year’s bill every two weeks, which is more frequently than is typical.

She also said local governments – primarily cities and counties – have to confirm that the appropriated capital outlay dollars will be spent as intended, while expressing optimism that a recent increase in state government staffing will improve tracking capabilities.

“We’re hoping that’s going to equate to more oversight,” Romero told the Journal.

However, the executive director of a Santa Fe-based think tank that has pushed for changes to New Mexico’s system for funding infrastructure projects said this year’s massive capital outlay bill – the largest in recent state history – could cause old problems to resurface.

“The hyperpolitical way New Mexico allocates its capital dollars causes the funding to be spread across many small projects without any prioritization to get the dollars to where they are most needed,” said Fred Nathan, executive director of Think New Mexico. “The more projects and smaller they are, the harder they are to track and make sure the money is spent properly and in a timely fashion.”

Tracking capital outlay spending has proved to be difficult in recent years.

Former Torrance County Sheriff Heath White was charged last week with embezzling public funds, at least some of which were intended to be used for new Sheriff’s Office vehicles.

In addition, the National Hispanic Cultural Center Foundation was ordered to repay nearly $147,000 in 2011 after money intended for a fresco project went to pay salaries and expenses of foundation staffers and to produce promotional materials for the project.

The state’s annual capital outlay package, or pork bill, typically uses bonds backed by future severance tax revenue to pay for bridges, dams, ballfields and other public works projects.

But this year’s measure will be funded by a cash surplus of an estimated $1.2 billion, due primarily to surging oil production in southeastern New Mexico. That means the money will be available more quickly than usual, and Romero said paperwork is already in place for some of the projects in the bill.

Among the big-ticket projects are:

n $29.3 million for the Children, Youth and Families Department’s new child wellness center in Albuquerque.

n $16 million for renovations and repairs at state-run prisons.

n $10 million for rural broadband infrastructure.

n $20 million to retrofit state buildings with solar panels or other types of renewable energy.

The bill passed the Legislature during this year’s 60-day session and was signed into law by Gov. Michelle Lujan Grisham, who used her line-item veto authority to ax about $9.5 million in proposed projects – or only slightly more than 1% of the total proposed spending.

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