Capital outlay system fails N.M.

New Mexico’s capital outlay process remains an archaic and dysfunctional system that fails to meet the state’s critical infrastructure needs, despite some recent incremental improvements.

Recently, a piece by the director of the Local Government Division of the New Mexico Department of Finance and Administration argued that the system is not as “broken and dysfunctional” as it appears (“Capital outlay system works — and is improving,” My View, April 14). That column highlighted recent reforms at the DFA, which are improving the agency’s capacity to track thousands of individual projects and efficiently move funding to them. We commend the DFA and the Legislature for these reforms.

The problem, however, is there is no overall vetting or prioritization of the thousands of projects that are sent to DFA for funding in the first place.

As a result, the Legislative Finance Committee reports that out of 650 active capital outlay projects with budgets over $1 million, 264 have made no progress toward completion, and 137 are behind schedule. The bottom line: Over 60% of large projects are stuck or stalled. When all projects are considered, $4.5 billion earmarked for approximately 4,600 projects is sitting on the sidelines, not benefitting New Mexico communities by creating jobs or upgrading infrastructure.

The dysfunction of New Mexico’s capital outlay system has its origins nearly half a century ago, as Think New Mexico documented in our 2015 report, “The Story of the Christmas Tree Bill: Fixing Public Infrastructure Spending in New Mexico.”

In 1977, two days before the legislative session concluded, the Legislature merged 27 bills seeking money for individual capital projects into a single massive bill. They called it the “Christmas Tree Bill” because it contained a present in it for nearly every lawmaker.

Not surprisingly, the bill passed unanimously and quickly became an annual tradition.

Every year, New Mexico divides up its available funds for infrastructure projects, commonly known as capital outlay, among the governor and all 112 legislators. In 2024, each senator was allocated about $4.2 million and each representative received about $2.5 million.

Legislators have complete discretion to spend their portion of that funding in any way they choose, subject to the veto of the governor. Governing magazine has called this system “unique” and repeatedly ranked it as the second-worst in the nation. The problems with New Mexico’s capital outlay process include:

The projects that get funded do not always match what is needed by the public. That is how you end up with funding in this year’s capital outlay bills for items like awnings for police vehicles and equipment for an artisanal cheese facility. Meanwhile, 201 bridges across the state remain structurally deficient, and New Mexico’s water and wastewater treatment systems need an estimated $2.8 billion in repairs.

The capital outlay appropriation process favors lobbyists for special interests over the public. Because the projects are not chosen in transparent, open meetings, the public’s voice is limited and the voices of lobbyists behind closed doors are amplified.

Finally, because many infrastructure projects are too large and costly to be funded by any individual lawmaker, and because there is only minimal coordination among lawmakers, projects often receive only partial funding. This prevents urgently needed projects from being completed in a timely manner and leaves public dollars sitting on the sidelines for years.

By contrast to New Mexico, the majority of states develop a statewide capital budget based on community needs, prioritize projects for funding, and fully fund them in an open, transparent and public process.

We urge New Mexico lawmakers to do the same and implement a transparent, coordinated system for prioritizing and fully funding the infrastructure projects that New Mexico communities need.