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Spending deadlines proposed for NM capital outlay funds

The new Vladem contemporary art museum in Santa Fe was among the projects flagged by the Legislative Finance Committee in a recent report. Of the more than $4 million in state funds appropriated for the museum in 2019, only about $40,000 had been spent as of November. (Eddie Moore/Albuquerque Journal)

Copyright © 2021 Albuquerque Journal

SANTA FE – In recent years, spending the money allocated by New Mexico lawmakers for infrastructure projects around the state has proved to be a vexing challenge.

In what would be a change, a key legislative budget panel is backing the idea of imposing spending deadlines on so-called capital outlay projects – at least for those projects funded by general fund dollars.

The spending requirements would be only for future years – so they would not affect already-approved projects – and would be included as language within the annual capital outlay bill.

Rep. Patricia Lundstrom, D-Gallup, chairwoman of the House Appropriations and Finance Committee, said she supports the change and expressed concern over the large amounts of unspent capital outlay dollars.

“I think we have to get these projects moved – it’s ridiculous,” Lundstrom told an LFC meeting this week. “There’s no excuse for those projects that are 5 years old.”

As of November, about $1.4 billion in funding for 2,644 different New Mexico capital outlay projects remained unspent, with 85% of those funds having been appropriated in the 2019 or 2020 legislative sessions, according to the Legislative Finance Committee.

But there’s also unspent infrastructure dollars from previous years, including $19.7 million from the 2016 session.

In all, general fund dollars make up roughly 47% of the unspent funds, with bonds backed by future severance tax revenue making up most of the remainder.

Among the projects flagged by the LFC for having large unspent balances are remediation of a Carlsbad brine well and construction of a new museum of contemporary art in Santa Fe.

LFC Deputy Director Charles Sallee described the spending requirements that would mandate that at least 50% of approved funding be obligated within two years of being appropriated – and a smaller amount after the first year – as a “use it or lose it” approach.

The approach could place more of an onus on local governments to get projects moving – and on lawmakers to fund realistic projects.

“It doesn’t do the economy any good for it to be sitting in the treasury,” Sallee said.

He also said a big state revenue surplus in recent years generated largely by a boom in oil production allowed for more general fund dollars to be targeted at infrastructure projects.

However, some lawmakers expressed concern the proposed spending deadlines could be problematic for lawmakers in rural areas that tend to spread out their annual infrastructure funding over multiple projects.

“It’s going to end up hurting rural New Mexico more than urban New Mexico,” said Rep. Harry Garcia, D-Grants.

Other lawmakers pointed out that some of the delays in spending capital outlay funds could occur at the state level, where infrastructure projects are overseen, and not just at the local government level.

In addition to inefficiency concerns, New Mexico’s capital outlay system for funding improvements to roads, bridges, dams and water systems has also come under scrutiny in recent years for its secrecy.

But attempts to overhaul the system, which allows each lawmaker to appropriate a designated amount of money for infrastructure projects, have been unsuccessful at the Roundhouse.

A capital outlay bill for the 60-day session that began Tuesday has not been filed. The annual infrastructure bills are typically not approved until the session’s final days.

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