Capital Outlay Reform

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2017 Legislative Update

capitaloutlayinitiativeDuring the 2017 legislative session, Senator Joseph Cervantes (D-Las Cruces) and Representative Kelly Fajardo (R-Belen) introduced Senate Bill 262 to create a transparent, merit-based system for funding New Mexico’s essential public infrastructure projects.

The bill proposed a process for vetting and planning proposed public works projects. A new interim legislative committee, the Public Works Committee, would receive public works project proposals from state agencies, local governments, and legislators by July 1 of each year. This committee would solicit feedback on the proposals from relevant state agencies (e.g., the Department of Transportation would be consulted on road projects, the Environment Department would be consulted on water and wastewater projects). Then, in open public hearings, the committee would use objective criteria to score the proposed projects, evaluating factors such as the project’s impact on health and safety, whether it is ready to begin planning or construction, and the project’s job creation potential. The committee would then use the prioritized list of projects to develop the infrastructure funding bill for that year.

Senate Bill 262 won the support of a diverse coalition of business, labor, and good government groups. It passed the Senate Rules and Senate Finance committees, and after being amended to take a more gradual approach to reform, the bill was approved by the full Senate on a vote of 29-10. Senate Bill 262 passed the House Appropriations Committee unanimously the day before the session concluded, but unfortunately it ran out of time awaiting a vote of the full House.

Spending public infrastructure dollars wisely not only ensures that New Mexicans have access to safe roads and clean drinking water, but also creates 2,700 jobs for every $100 million spent – which is especially urgent at a time when New Mexico leads the nation in unemployment.

Issue Summary

capitaloutlayinitiativePublic infrastructure projects – like roads, dams, water systems, courthouses, and university buildings – are essential to New Mexico’s economy and quality of life. Yet New Mexico’s latest infrastructure report card from the American Society of Civil Engineers gave the state poor grades in categories ranging from drinking water and flood control systems to roads and bridges. New Mexico drivers pay $752 million – $526 per driver – each year in unnecessary repair costs due to driving on roads in poor condition.

A major cause of this crisis is New Mexico’s dysfunctional system of funding public infrastructure (or “capital outlay”), a system that Governing magazine has called “unique” and repeatedly ranked as the second worst in the nation. New Mexico State Senator Pete Campos has written that the system is “archaic, parochial, and highly political.”

That system began in 1977 with passage of the first “Christmas Tree Bill.” This capital outlay bill funds infrastructure using money from bonds issued against the state’s severance taxes on oil, gas, and minerals. However, those projects are selected using a political formula: the dollars are divided up among the governor and 112 legislators, each of whom individually select projects to fund in their districts (the bill is known as the “Christmas Tree Bill” because it contains “presents” for every district and lawmaker).

This process has resulted in a number of serious problems, which are detailed in Think New Mexico’s report. First, the bill itself tends to be highly politicized. Six times in the past two decades, Christmas Tree (or capital outlay) bills have failed to pass during the regular legislative sessions as a result of fights between Democrats and Republicans or the legislature and governor over what to include (one news article described the 2015 battle as “a cloud of partisan bickering and finger-pointing”), requiring the legislature to reconvene in expensive special sessions to approve hundreds of millions of dollars for critical infrastructure needs.

In addition, because the Christmas Tree Bills divide an average of $300 million among an average of 1,500 individual projects, large urgent projects tend to be neglected. Instead, dollars flow to small items like football helmets, sculpture gardens, and band uniforms (many of which do not last as long as the 10-year bonds that pay for them, meaning the state is paying interest on them long after they have been discarded).

When big projects do receive funding, it is often only a tiny fraction of what is needed. This has resulted in major projects like courthouses and dams being delayed for years or never completed due to insufficient funds—while the dollars that have been allocated to them sit idle. In June 2015, the Legislative Finance Committee calculated that $311.6 million for 1,337 projects from the 2011-2014 Christmas Tree Bills is currently sitting around unused.

Perhaps most troubling of all is that the process favors lobbyists for special interests over the public. While passing a bill requires a lobbyist to persuade dozens of legislators on multiple committees in both chambers, as well as the full House and Senate, obtaining capital dollars for a client often means only having to persuade a single legislator. Because the projects are not chosen in transparent, open meetings, the public’s voice is limited.

In 2015, Think New Mexico launched a new initiative focused on replacing the dysfunctional Christmas Tree Bill with a transparent, merit-based system for funding the state’s public infrastructure. In designing our proposed reform, we looked to models both inside and outside the state’s borders. For example, New Mexico’s neighboring states of Oklahoma and Utah are among 19 states that have established independent commissions to analyze statewide infrastructure needs and direct the dollars to priority projects.

Similarly, New Mexico itself has created an independent council to prioritize and fund public school infrastructure projects, and this process has successfully improved the condition of the state’s schools. In the past few years, the legislature and governor have established similar structures for funding some water infrastructure, tribal infrastructure, and colonias infrastructure.

Think New Mexico recommends that the legislature and governor enact legislation to create an independent Capital Outlay Planning Board. The board would include experts appointed by both the legislative and executive branches. It would combine all the infrastructure plans created by state agencies and local governments into a single comprehensive plan. Projects in the plan would be prioritized using objective criteria, and then the top priorities would go to the legislature annually for funding. Based on Oklahoma’s system, we recommend that both the legislature and governor have the power to remove projects from the list – but not to add any new ones.

During the 2016 legislative session, House Bill 307 was introduced by Representative Zach Cook (R-Ruidoso), Senator Carlos Cisneros (D-Questa), and Representative Jason Harper (R-Rio Rancho) to implement Think New Mexico’s proposed reforms. The bill received support from a wide variety of organizations, including both business and labor groups, and it had hearings in the House Government, Elections, & Indian Affairs Committee and the Senate Public Affairs Committee.

Think New Mexico will continue to advocate for improving New Mexico’s infrastructure funding process. These reforms have the potential to not only improve the essential infrastructure that communities depend on, but also make the state more economically competitive, create new jobs, and enhance the transparency and accountability of state government.

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News Coverage

newspapericon-smallRead an Albuquerque Journal editorial in support of Think New Mexico’s legislation to reform New Mexico’s capital outlay system • March 10, 2017

newspapericon-smallRead a column by syndicated columnist Tom McDonald supporting Think New Mexico’s capital outlay reforms • February 15, 2017

newspapericon-smallRead a Las Cruces Sun-News editorial supporting Think New Mexico’s capital outlay reform legislation • February 3, 2017

radioicon-smallListen to KANW Dateline New Mexico radio report on Think New Mexico’s effort to reform public infrastructure spending • March 15, 2016 (mp3, 3:59)

radioicon-smallListen to KUNM 89.9 New Mexico People, Places, and Ideas radio show on Think New Mexico’s initiative to reform the state’s public infrastructure spending • March 4, 2016 (mp3, 27:15)

newspapericon-smallRead a column by syndicated columnist Tom McDonald about the need for Think New Mexico’s infrastructure financing reforms, which has run in the Clovis News Journal, Edgewood Independent, Las Vegas Optic, Portales News-Tribune, Quay County Sun, Roswell Daily Record, and the Silver City Daily PressFebruary 2016

tvicon-smallWatch KRQE News 13 story on Think New Mexico’s effort to enact capital outlay reforms in 2016 • February 16, 2016 (2:25)

tvicon-smallWatch Larry Barker on KRQE News 13 investigate a “fiscal folly.” • February 8, 2016 (8:18)

newspapericon-small Read a Las Cruces Sun-News editorial about the need for Think New Mexico’s capital outlay reforms, which was also published in the Alamogordo Daily NewsFebruary 27, 2016

newspapericon-smallRead a Santa Fe New Mexican editorial in support of Think New Mexico’s capital outlay reform legislation • February 9, 2016

newspapericon-smallRead an Albuquerque Journal editorial in support of Think New Mexico’s capital outlay reform legislation • February 7, 2016

newspapericon-smallRead a Rio Grande Sun editorial in support of Think New Mexico’s capital outlay reform legislation • February 11, 2016

newspapericon-smallRead about the need for Think New Mexico’s public infrastructure financing reforms in New Mexico In Depth’s 2016 Legislative Guide and in a follow-up articleJanuary 2016

tvicon-smallWatch KNME-TV New Mexico In Focus “People, Power, and Democracy” report on Think New Mexico’s capital outlay reforms • January 22, 2016 (11:27)

radioicon-smallListen to KSVP 990 AM radio report on Think New Mexico’s initiative to reform the state’s public infrastructure spending • January 22, 2016 (mp3, 13:28)

radioicon-smallListen to KANW Dateline New Mexico radio reports on Think New Mexico’s public infrastructure reforms Part 1 (mp3, 3:45) and Part 2 (mp3, 3:51) • January 14-15, 2016

radioicon-smallListen to KSFR’s Radio Cafe with Mary-Charlotte Domandi on Think New Mexico’s public infrastructure reform initiative • December 7, 2015 (mp3, 49:39)

newspapericon-smallRead a column by Chris Erickson in the Las Cruces Bulletin in support of Think New Mexico’s infrastructure financing reforms • November 20, 2015

newspapericon-smallRead a Roswell Daily Record editorial in support of Think New Mexico’s infrastructure financing reforms, which was also published in the Silver City Daily PressOctober 25, 2015

newspapericon-smallRead a Rio Grande Sun editorial about the need for Think New Mexico’s infrastructure financing reforms, which was also published in the Roswell Daily Record and the Silver City Daily PressOctober 25, 2015

newspapericon-smallRead an Albuquerque Journal editorial in support of Think New Mexico’s proposal to reform infrastructure funding • October 7, 2015

newspapericon-smallRead a piece by syndicated columnist Tom McDonald endorsing Think New Mexico’s infrastructure financing reforms, which has run in the Clovis News Journal, Edgewood Independent, Las Vegas Optic, Portales News-Tribune, Quay County Sun, Roswell Daily Record, Silver City Daily Press, and the Taos NewsOctober 2015

newspapericon-smallRead a Las Cruces Sun-News editorial in support of Think New Mexico’s infrastructure funding reforms, which was also published in the Alamogordo Daily News, the Carlsbad Current-Argus, the Deming Headlight, and the Silver City Sun-NewsOctober 7, 2015

newspapericon-smallRead an article from the Farmington Daily Times about the need to reform New Mexico’s public infrastructure spending • October 29, 2015

newspapericon-smallRead an article from the Truth or Consequences Herald about Think New Mexico’s proposed public infrastructure reforms • October 21, 2015

newspapericon-smallRead a New Mexico In Depth article about Think New Mexico’s new initiative to reform public infrastructure spending • October 4, 2015

newspapericon-smallRead an Albuquerque Journal article about our new initiative to fix public infrastructure spending in New Mexico • October 4, 2015

newspapericon-smallRead a Santa Fe New Mexican article about Think New Mexico’s new initiative to reform public infrastructure spending • October 4, 2015

tvicon-smallWatch Larry Barker on KRQE News 13 investigate New Mexico’s “Monuments to Waste.” • October 14, 2014 (7:17)

tvicon-smallWatch Larry Barker on KRQE News 13 investigate the “ghost buildings” left behind in the wake of dysfunctional capital outlay spending! • October 14, 2014 (7:41)

tvicon-smallWatch Larry Barker on KRQE News 13 investigate wasteful capital outlay spending! • May 23, 2012 (7:29)

tvicon-smallWatch Larry Barker on KRQE News 13 investigate capital outlay disasters across the state! • May 3, 2012 (7:03)

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