N.M. capital outlay system works — and is improving
There’s a misconception that New Mexico’s capital outlay system is broken and dysfunctional. Having worked in capital outlay for 12 years, the last six as the capital outlay bureau chief, I can attest that the system is not broken.
Since 2019, we have put $10 billion to work for New Mexico to construct or improve our roads, museums, schools, parks, water systems and public buildings. Historic revenue is helping the state put more money toward capital projects than ever before. And, at New Mexico’s Department of Finance and Administration, we are modernizing operations and increasing staff and resources to keep up with the times.
The 2024 legislative session produced landmark collaboration between the legislative and executive branches, marking the most substantial reform of the capital outlay system in decades.
The Department of Finance and Administration will launch a new Infrastructure and Planning Division starting July 1. This stems from passage of House Bill 232, sponsored by Rep. Meredith Dixon, D-Albuquerque. The new division will have staff and resources solely dedicated to the capital outlay process, creating an improved level of commitment and focus.
On average, capital outlay funding is spent at a rate of 25% per year. The state spends the oldest capital outlay funds first, then the new funds as they are appropriated and awarded. As the funding pool grows, so will the amount of unspent funds — but that doesn’t mean projects are stalled. One of the most common misconceptions about capital outlay is that $5 billion is sitting “unspent.”
The timing for disbursing these funds depends on the type of project, funding source and if it needs to go through the bond process. Many pending projects must be completed within four years. Some have an extended time frame with no reversion date.
The expenditure rate slowed over the past two years because of challenges posed by the pandemic, such as supply chain constrictions and construction costs. However, those issues are beginning to moderate, and the state is working aggressively to mitigate the impacts.
Additionally, the Department of Finance and Administration will receive $2 million to modernize the capital outlay tracking and reporting system, which in its current state is inadequate to handle the complexity of administering capital outlay. The new system will help the state track projects more closely and keep them moving. It will also notify appropriate shareholders of the status of their projects.
Under the new system, users and the public will be able to see real-time data on each project, from its development and planning to the final expenditure and project completion.
Gov. Michelle Lujan Grisham and state lawmakers worked together during this year’s 30-day session to improve New Mexico’s capital outlay system. Soon, our dramatically improved system will speed the delivery of new roads, museums, schools, parks, water systems, public buildings and other infrastructure for communities across the state. This also helps ensure tax dollars are spent wisely and responsibly.