February 2, 2020

New Mexico’s capital outlay process is often a crazy mess, lawmakers say

Photo Credit: Reinis Traidas cc

On Friday morning, three Santa Fe firefighters in uniform walked up to state Sen. Peter Wirth in a Roundhouse hallway.

They came bearing a form, and if the majority leader would sign on the dotted line, they’d be one step closer to getting new equipment. 

They weren’t the only ones to seek Wirth’s help. The Palace of the Governors wanted interior renovation. The yet-to-be-constructed Vladem Contemporary art museum needed solar. Tesuque Pueblo was after remote monitoring for a drinking water system.

An Albuquerque science center wanted something, too. Not in Wirth’s district? No matter. People from all corners of the state were walking around the Roundhouse with forms in hand, looking for legislators to sign them.

“It does become overwhelming,” said Wirth, a Santa Fe Democrat, noting lawmakers had a Sunday deadline to sign and submit the slips. “You’re trying to run a committee, prepare legislation and all of a sudden you’ve got 70 forms.”

Welcome to New Mexico’s capital outlay process — the way the state funds infrastructure and other projects every year. Its significance, particularly for rural areas that can’t fund their own projects, can’t be understated. For decades, this is how towns have gotten their Little League fields, counties obtain badly needed road repair, airports upgrade their terminals.

If it sounds cumbersome, this isn’t the half of it — even an eighth. The rush to get lawmakers to sign these precious pieces of paper is merely one part of an extremely complicated system that’s confusing to freshman legislators and burdensome to veterans. What’s more, many observers say it’s rushed and opaque from the start, meaning there’s a pronounced lack of public information about which projects the governor and lawmakers are proposing and ultimately support.

Good government groups have long called for reform of one particular part of the capital outlay process: the Legislature doesn’t disclose which projects were supported by which legislators, or by the governor. Efforts to change that have been repeatedly stymied.

But there’s another, less publicized aspect of the process that some lawmakers view as problematic and say may even run afoul of state statute. Legislators say they have yet to receive a full list from Gov. Michelle Lujan Grisham of all the projects she is supporting, even though the session is already more than one-third over.

“We’ve expressed concern that we would like to see her list,” said Sen. John Arthur Smith, chair of the Senate Finance Committee. “They’ve identified their spending level, but not the projects, and we want the projects.”

According to New Mexico law, governors have a Jan. 5 deadline to submit their budget recommendations, which includes “all expenditures for capital projects to be undertaken and executed.” Lujan Grisham submitted her spending plan on time for the main part of the budget but not, legislators say, all the capital outlay projects.

Smith, D-Deming, said he wasn’t legally qualified to determine whether this broke the statute, but then said, “They’re not living up to the word of the law.”

Other legislators brought this up, too. 

“There’s a statutory requirement that list be provided earlier and that hasn’t been done for a number of years,” Wirth said.

Indeed, it’s not just Lujan Grisham, said Linda Kehoe, a consultant at the Legislative Finance Committee who is an expert in capital outlay and has been in state government since the King administration. She said former Gov. Susana Martinez didn’t provide a clear and complete list of proposed projects by the deadline, either. No one has done it since Bill Richardson, she said.

For its part, the Governor’s Office said it did not violate the statute because it did include a “starting framework” for proposed capital outlay projects — from roads to rural infrastructure to the spaceport — spread throughout its budget recommendation. And it argued the Legislature hadn’t done its part.

“We have not received from the Legislature nor yet agreed upon a firm number for capital outlay,” spokeswoman Nora Meyers Sackett said. “What good would a list of projects be if we don’t know the amount we are working with from the appropriators?”

Either way, lawmakers, legislative analysts and outside experts say not having a clear list at the start of the year jeopardizes the thoroughness of the process.

“If that were made available right away, there would be an opportunity for people to look at it, scrutinize it,” said Sen. Sander Rue, an Albuquerque Republican who has sponsored bills along with Rep. Matthew McQueen calling for capital outlay reform.

Kehoe added that legislators could end up proposing the same projects as the governor because they’re in the dark about what she’s proposing. In fact, projects have been accidentally double-funded under previous administrations because of this, Smith said.

“The disadvantage is for legislators because they have no idea what she wants,” Kehoe said, referring to the governor. “We have no idea who is going to her and what they’re asking for and what she’ll end up trying to fund.”

The lack of a list could also encourage backroom deals, meaning capital outlay can become leverage for things that have nothing to do with capital outlay.

“It allows less deliberation on the merits of the projects,” Smith said, “and more political maneuvering.”

Take an example from the Richardson administration. Smith said that during one session, when Richardson was trying to win approval for a bill, he brought legislators to his office and offered to give their districts the capital outlay projects they wanted in exchange for their votes on the legislation. Some lawmakers agreed to the trade, although Smith said he didn’t.

“I was offered a lot of capital and I told him — in the process when he was still trying to attract my vote — I’d just as soon go home with nothing in my district.”

After the vote, Smith was surprised to receive a call from Richardson, thanking him for not going through with the exchange — because now he owed projects to a bunch of legislators.

“He thanked me that he didn’t have to encourage me or discourage me with incentives,” Smith said.

That was a different era, of course, but it might beg the question of whether that kind of trading occurs today in this session.

Legislators consulted on this said they hadn’t seen it. And in the Governor’s Office, spokesman Tripp Stelnicki said “the negotiating that goes on has more to do with the funding and how it will be distributed between the executive and legislative branches.”

He also said the larger, statewide capital outlay projects ultimately backed by the governor are sufficiently planned and deliberated. State agencies submit them in five-year plans and public hearings are publicized and held in the summer and fall. 

While it’s clear there are a lot of unknowns at this point in the session, here’s what is known: 

  • The pot of money: There’s $442.1 million in capital outlay money from bonds backed by state severance tax revenue, although $79.6 million of it is already earmarked, according to the LFC. The amount available from general obligation bonds is $198.9 million, and legislators could also authorize funding from other state funds or the general fund. 
  • Love of fractions: Governors and legislators may not be mathematics majors, but they love to divide these sums of money into fractions. The overall pot will be divvied up into three portions: the House will decide how to allocate one, the Senate another and the governor still another. They also decide what percentage of the money goes to statewide projects. The Senate majority leader said the different sides were “close” to settling on the split, but declined to divulge a number. 
  • To each his or her own: The House and Senate portions are then further divvied up among all 112 members, and legislators each get a portion of money for projects of their choosing. That number varies. In lean budget years it can be small or even nonexistent, while last year each senator got around $3.5 million.
  • Whittling it down: Just because a lawmaker signs a form doesn’t mean a project will get funded. After Sunday, a giant spreadsheet will be created with a list of all the projects on the signed forms. Then, when members know their allotments, each one decides which projects they actually want to fund, usually in consortium with other members from their geographic areas — although with no public hearings or debate. They rule out many. By Friday, Wirth alone had already received requests for $69 million in projects.
  • The final bill: All the projects chosen by lawmakers and the governor are listed in the final legislation, which is then voted on. Total amounts vary greatly. In 2019, the final bill included $900 million in projects while the year before it was $180 million. But to the frustration of taxpayers, the public can’t tell who selected which projects.

The process is, of course, influenced by politics. After all, this is an election year and legislators are hoping to deliver desired projects to their districts. They’re negotiating with the governor for a larger piece of the pie than they got last year, said Senate President Pro Tem Mary Kay Papen. 

“I’ve been fighting because we’re all running,” said Papen, D-Las Cruces, referring to lawmakers’ reelection efforts. “Last year, we gave her a very large piece, which we all wanted to do and we did do. And we’re hoping this year that the legislators will be able to take home some very good capital outlay to their communities.”

Outside observers like Santa Fe-based Think New Mexico say the whole kitchen sink needs to be reformed.

“Unfortunately, the current process is too rushed and too secretive, and that results in a lack of coordination among the Governor’s Office, legislators, and local officials about which projects are the most urgently needed and how to fully fund them,” said Fred Nathan, the think tank’s executive director. “Consequently, some legislators feel that they don’t have enough time or information about what the governor is funding and local governments feel the same way about what legislators are funding.” 

While elected officials have paid much lip service to the idea of reform over the years, efforts have fallen short. Last year, the Senate voted down a bill requiring the public disclosure of how legislators and the governor divvy up their capital outlay allocations. This year, Lujan Grisham did not put Rue and McQueen’s renewed effort on her agenda, Rue said. And those bills didn’t include reforming other parts of the process.

“This isn’t our money,” Rue said. “For us to refuse to disclose how we’re using taxpayer money is absurd.”

But Rue said he and McQueen, D-Galisteo, won’t give up if they’re reelected.

“If I come back,” he said, “then I will pick up where we left off.”