(The late) Sen. Pete Domenici excelled at bringing home federal resources to meet New Mexico’s needs. But as chair of the Senate Budget Committee, he was also keenly aware transparency and fiscal scrutiny were essential. Projects had to be justified.
New Mexico is receiving an unprecedented amount of federal money at a time when it is also receiving a record-breaking level of oil and gas revenue. The sums available are staggering, the opportunities and challenges enormous. Unfortunately, our history is less-than-accountable utilization of funds.
While there is a Capital Improvement Plan, it is just the starting point for setting priorities. The governor and Legislature agree to fund “statewide projects” off the top of available capital outlay funds.
The next step – deciding how the remaining funds are allocated – is an ad hoc, hit-or-miss hodgepodge. The governor and each legislator are allocated a portion of this pot of money, and each decides how his or her share should be spent. This often results in projects not being fully funded or delay-related cost overruns. The drawn-out funding often makes projects obsolete by the time they are completed. Others never get built.
New Mexico is the only state to use this system. It is also the only state to divide funds for local capital projects without a centralized department or committee vetting them.
This is no small matter. According to the Department of Finance, as of July 2021, 3,766 “outstanding” local projects authorized between 2016 and 2021 have an unspent balance of $1.9 billion. An additional $585 million was outstanding for public school capital outlay projects. “Outstanding funds” include unspent but encumbered funds.
This system complicates the budget process. It is impossible to achieve strategic goals. It dilutes focus and ties up significant chunks of money for years.
Now is the time to clean out this clog in the fiscal pipeline and fully fund these capital projects. Then change the system to be strategic, transparent and efficient.
The State Investment Council is focused on optimizing permanent fund earnings. For spending, it would make sense to have a bipartisan group of experts with diversified, technical backgrounds evaluate capital infrastructure projects.
During the upcoming session, the Legislature will be spending billions of federal dollars in addition to preparing a budget that last year totaled $7.4 billion. It is an excellent time to create a best practices process with internal controls to minimize waste, abuse and fraud.
Denise Greenlaw Ramonas worked on energy and a wide range of issues in the United States Senate as a professional staffer for Sen. Pete V. Domenici. She served as the assistant secretary of the Senate for two majority leaders and was elected the first female chief clerk of the N.M. House of Representatives.