By the end of the 2024 fiscal year, an estimated $5.9 billion in capital outlay funds — money designated for New Mexico infrastructure projects such as roads, water systems and public schools — had gone unspent, a historic high.
At the Wednesday morning interim legislative Capital Outlay Subcommittee’s first meeting since the most recent session, two state analysts offered lawmakers ways to address the shortcomings in the state’s capital outlay process leading to the unspent funds.
Some of the problems they identified included a lack of sufficient funds for all the capital outlay requests; piecemeal funding; inadequate eligibility and vetting requirements; and no connection between localities’ plans and lawmakers’ appropriations.
Legislative Finance Committee Principal Analyst Cally Carswell told the committee New Mexico’s current system meets the Legislature’s goal of empowering individual lawmakers to direct public funding to priorities in their districts as they see fit.
However, she said, the capital outlay process doesn’t meet other goals of consistently putting state resources toward the most critical and beneficial projects and local communities’ priorities; improving quality of life; subsidizing investments to support public services; and accelerating economic progress across the state.
“The system is really not structured currently to service these goals or support them,” she said. “In fact, it presents a lot of structural barriers to achieving these goals.”
The subcommittee on Wednesday didn’t formally vote on changes to the capital outlay process but their discussion previewed legislative proposals that could be introduced in the 2026 session.
Rep. Derrick Lente (D-Sandia Pueblo) told the committee the system must change.
“Under the current system, we are often spreading the total money available too thinly and underfunding projects time and again, term after term, year after year,” he said. “This means that it takes too long to complete projects, or they never get completed at all.”
More requests than money to giveThe Legislature’s practice of dividing money among individual lawmakers, called “member share,” makes it harder to adequately fund projects because the requests lawmakers receive exceed what they have, Carswell said.
This year, local governments asked for $3.9 billion in capital outlay; however, just under $600 million was available, according to data in Carswell’s and New Mexico Department of Finance and Administration Infrastructure Planning & Development Division Director Wesley Billingsley’s presentation to the committee.
“This dynamic has remained true even as our revenues to the program have surged,” Carswell said. “There has been this perception, since the state has been in a strong financial position, that the resources are sort of endless. But at the end of the day, you have still had pretty small amounts of money relative to the demand that is out there.”
This results in piecemeal funding, she said, and lawmakers expressing “increasing frustration” about their inability to support large projects on their own without substantial support from the governor.
Approximately 44% of nearly 1,400 projects in the 2025 capital outlay bill received less than half of what they requested, the presentation states. Only five projects received $10 million or more.
Too easy to sit on moneyThe process includes minimal eligibility requirements to ask for and receive capital outlay money, Carswell said, which contributes to the spate of requests and hinders their effective prioritization.
When localities don’t spend capital outlay dollars lawmakers already approved in prior years, she said, they don’t need to meet any benchmarks to request a re-authorization and they can continue to ask to push spending deadlines as many times as they want. A lawmaker just has to sign off, she said.
“It’s very hard for members to say no,” she said. “There’s not really a good reason for you to do that.”
Lente said reauthorizations need strict time limits.
“We can’t afford to continue to roll this money over and over when we have larger projects looming that we could do a lot of good in the state with,” he said.
Funding doesn’t follow local plansThe Legislature consistently puts funding toward projects before localities are ready to spend the money, Carswell said and, in some cases, before they have even created “operational” plans for maintaining and running a facility or project.
Billingsley said local government officials should ask his agency for help with their projects before approaching lawmakers, because they can apply for other grants before seeking capital outlay dollars.
Ideally, localities rank their needs on a five-year plan, Carswell said; however, the current system makes it difficult to fund their most important and largest needs.
In the last round, localities ranked 564 projects costing at least $5 million in their top five, yet 350 of those had received zero capital outlay funding as of Monday, according to the presentation.
“We’re missing that opportunity to use these great surpluses that we have to accomplish the bigger, more important things that our communities are telling us that they need,” Carswell said.
Potential solutionsCarswell said potential ways of addressing the capital outlay system include: allowing only one extension per appropriation; shortening extensions from two years to one; and no longer allowing pre-approved funding to be moved to an entirely different project or purpose.
Lawmakers could also ban capital outlay from going to water, sewer and road projects, which other programs already fund, she said, or [the LFC] could encourage lawmakers to not fund those kinds of projects with capital outlay or scrutinize them more carefully.
Rep. Pat Woods (R-Broadview) said he supports LFC and DFA working together to create eligibility and prioritization criteria for capital outlay requests that lawmakers can write into state law.
Both Rep. Meredith Dixon (D-Albuquerque) and Sen. George Muñoz (D-Gallup) said they supported codifying stricter guidelines, noting that neither the Legislature nor the executive branch excel at following loose policy guidelines.
“I support making this a better and more effective process, and I don’t think ‘encouraging’ legislators actually works,” Dixon said.
