Sen. George Muñoz, D-Gallup
Chair
Senate Finance Committee

By Daniel J. Chacón and Esteban Candelaria
The Santa Fe New Mexican

Highly coveted capital outlay is proving to be a double-edged sword for the New Mexico Legislature.

While the so-called pork barrel spending allows lawmakers to bring the bacon home to their districts, a growing backlog of projects and balances of unspent capital outlay expected to exceed $6 billion are turning into a major headache.

Sen. George Muñoz, D-Gallup, chair of the powerful Senate Finance Committee, reiterated his frustrations with the backlog Thursday, threatening to not hear a bill next year to reauthorize capital outlay appropriations beyond a year.

“We cannot look like the craziest people in the world when somebody walks by and says, ‘Oh, here’s $500 for your project even though it’s going to take a million,’” he said, adding he assumed the governor is going to “whack” projects that are “really short” of funding.

“It’s time,” he said. “I cannot give you a winning lottery ticket and you sit there and not cash it time and time and time again.” 

He warned unspent dollars for capital projects across the state would be one of the first places he would look if the Legislature needed to make cuts.

“Capital outlay is the worst thing we’re doing,” he said. “We’re wasting money. … People show up with a project and an idea, and they have no plan.”

But as is the case every year, both chambers of the Legislature passed the capital outlay bill, which is now headed to the desk of Gov. Michelle Lujan Grisham.

The bill didn’t receive unanimous support, though.

A $10 million appropriation by the governor to build a reproductive health clinic in an unspecified location in Northern New Mexico drew opposition from Republicans in both chambers.

Sen. Jim Townsend, R-Artesia, kicked off Thursday’s discussion on House Bill 450, the $1.2 billion measure that would fund more than 1,400 projects statewide ranging from as little as $4,000 to as high as $40 million, by noting there was an “extended debate” in the House over the governor’s $10 million appropriation.

“I mean, it is what it is,” he said before asking Muñoz if there was anything else in the bill he thought deserved further investigation or debate.

Muñoz brought up the $4,000 appropriation, which he said was for signs for a school district.

“Other than the one that you mentioned that was debated on the floor of the House, I don’t see a whole lot of other issues in this capital outlay bill — other than there’s a lot of projects that are probably underfunded or not funded correctly,” Muñoz said.

Same story, different year.

Sen. Pete Campos, D-Las Vegas, said during the floor discussion the Legislature has been trying to improve the capital outlay process for more than three decades.

“We continue to make those improvements, but the bottom line with all of this is the individuals who continue, if you will, to suffer are the taxpayers,” he said, adding the state’s booming oil and gas industry has increased the amount of money available for capital outlay.

“It’s important for all of us to get out into our districts to talk to people, to encourage them to do the full planning, to continue to find ways to make sure the quality of life their area is going to be upheld,” he said.

The problem is multi-pronged.

Reasons range from insufficient funds to complete projects to not enough employees to manage them. More recently, inflation has been a major factor, driving up construction costs.

Capital outlay is a challenging for legislators to rein in. Not only does it afford them opportunity to bring money to their districts for equipment or a wide range of projects, from acequia improvements to the construction of a new courthouse or a bridge, the money also buys lawmakers political influence among their constituents during election time.

At the start of the session, Muñoz vowed this would be the year the Legislature fixed capital outlay.

Lawmakers did implement something of a remedy to the growing backlog of capital projects, creating a $50 million “closing fund” to help complete long outstanding projects nearing completion but which for years have been nickel-and-dimed.

“I think we started to fix it because we went back and completed projects with $50 million,” Muñoz in an interview.

The fund, used to round out some 90 projects, was the product of negotiations between lawmakers and the executive branch, said Rep. Derrick Lente, D-Sandia Pueblo.

A bipartisan, bicameral committee told the Governor’s Office it was not interested in spending all the state’s severance tax bond capacity this year, and effectively held on to the $50 million, he said.

Those dollars, taken from taxes on revenue from oil, natural gas and other resources extracted from New Mexico soil, are used to fund many of the state’s capital outlay projects.

“It was the Legislature standing firm on our commitment to wanting to be fiscally responsible, but it was also … to say ‘You know what? We could actually put this money to good work,’ “ said Lente, chair of the House Taxation and Revenue Committee.

The move, though, is a drop in the bucket compared to the estimated 5,300 projects that were outstanding at the end of the first quarter of fiscal year 2025. That list is expected to grow to roughly 6,500 with only six or seven staffers managing them.

“It’s unmanageable, and until we bring it upon ourselves and do some tough love, we’re not ever going to fix the problem,” Muñoz said during a committee meeting. “I mean, $6 billion, we could build a lot of nice things across New Mexico.”

Cally Carswell, capital outlay analyst for the Legislative Finance Committee, told lawmakers in committee the balance of unspent capital outlay of $5.8 billion at the end of the first quarter of fiscal year 2025 “should come down a little by the time” the projects in HB 450 come online.

“But we’ll be somewhere over $6 billion next year,” she said. “It could put us close to $7 billion when we sort of start the reporting in the next fiscal year.”

Like Campos, Muñoz said communities will have to be prepared with projects if they come to lawmakers with their hands out.

“You better come prepared with a plan. You better come prepared with a cost. You better have the ability to complete and manage and maintain your projects or we’re not going to do it,” he said. “If you don’t have a plan, if you don’t have estimates, if you don’t have design, you don’t have anything. You have a dream.”