SENATE RULES COMMITTEE SUBSTITUTE FOR

SENATE BILL 507

51st legislature - STATE OF NEW MEXICO - first session, 2013

AN ACT

RELATING TO PUBLIC MONEY; INCREASING FISCAL AND PROGRAMMATIC SCRUTINY OF CAPITAL OUTLAY EXPENDITURES; REQUIRING COMPREHENSIVE FIVE-YEAR PLANS; CREATING THE CAPITAL OUTLAY PLANNING AND MONITORING DIVISION IN THE DEPARTMENT OF FINANCE AND ADMINISTRATION; CREATING A JOINT PERMANENT LEGISLATIVE CAPITAL OUTLAY REVIEW COMMITTEE; PROVIDING POWERS AND DUTIES; CREATING A FUND; MAKING TRANSFERS; MAKING AN APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. [NEW MATERIAL] CAPITAL OUTLAY REVIEW COMMITTEE CREATED--MEMBERSHIP--APPOINTMENT--VACANCIES.--

          A. The "capital outlay review committee" is created as a permanent joint interim legislative committee. The committee shall be composed of seven members from the house of representatives and seven members from the senate appointed by the New Mexico legislative council. The members of the capital outlay review committee shall be appointed from each house so as to give the two political parties having the most members in each house the same total proportionate representation on the committee as prevails in that house; provided that in the computation, major fractions shall be counted as whole numbers, and in no event shall either of the two major parties have less than one member from each house. The members shall serve for terms of two years or less expiring on the first day of the regular session held in odd-numbered years. A member may be removed from the committee by the New Mexico legislative council for nonattendance according to New Mexico legislative council policy.

          B. No action shall be taken by the committee if a majority of the total membership from either house on the council rejects such action.

          C. The chairship of the committee shall rotate between the house and the senate, and for the fifty-first legislature, the chairperson shall be a senate member and the vice chairperson shall be a house member.

     SECTION 2. [NEW MATERIAL] SUBCOMMITTEES.--Subcommittees may be created only by majority vote of all members appointed to the capital outlay review committee. A subcommittee shall be composed of at least one member from the house of representatives and one member from the senate, and at least one member of the minority party shall be a member of the subcommittee. All meetings and expenditures of a subcommittee shall be approved by the full committee in advance of the meeting or expenditure, and the approval shall be shown in the minutes of the committee.

     SECTION 3. [NEW MATERIAL] CAPITAL OUTLAY REVIEW COMMITTEE DUTIES.--

          A. The capital outlay review committee shall:

                (1) oversee functions and processes of the capital outlay planning and monitoring of the several state agencies that propose or review capital project requests pursuant to the Capital Outlay Planning and Monitoring Act;

                (2) adopt standards and guidelines for evaluating requests for capital project funding, including consideration of how singular projects fit in with the state capital improvements plan and how they maximize federal, state and local revenue sources;

                (3) adopt a standard capital project request form that includes the information required by staff and the committee to evaluate requests;

                (4) prioritize capital project requests received from the capital outlay planning and monitoring division and from legislators based on the standards and guidelines and make recommendations to the legislature for funding the prioritized projects;

                (5) require periodic reports from state agencies, institutions, instrumentalities and local governments that receive funding for state and local capital projects to ensure that:

                     (a) funded capital projects are implemented in a cost-effective manner and consistent with the purpose of the appropriation;

                     (b) funded capital projects are proceeding in a timely manner; and

                     (c) money is reverted to the funding source of the capital project in a timely manner;

                (6) conduct ongoing reviews of state and local infrastructure capital improvements plans and report to the legislature;

                (7) directly or through its staff participate in hearings held by the capital outlay planning and monitoring division and other hearings held by state agencies responsible for reviewing capital project proposals and planning; and

                (8) perform such other duties as it deems necessary or that are assigned to it by the New Mexico legislative council.

          B. Unless otherwise provided by law, the following proposed capital projects are exempt from committee review, though not from consideration of the projects in relation to the state capital improvements plan:

                (1) capital projects funded pursuant to the Public School Capital Outlay Act;

                (2) department of transportation road projects funded in whole or in part by federal highway funding; and

                (3) capital projects that will be funded by loans or grants from the New Mexico finance authority and not from the general fund.

     SECTION 4. [NEW MATERIAL] STAFF.--

          A. The staff for the capital outlay review committee shall be provided by the legislative council service and the legislative finance committee.

          B. The legislative council service and the legislative finance committee may, subject to legislative appropriation:

                (1) appoint and employ such professional, technical and clerical assistance as they and the committee deem necessary to carry out the duties of the committee; and

                (2) enter into contracts for professional, technical or clerical assistance as necessary.

     SECTION 5. [NEW MATERIAL] INTERAGENCY COOPERATION.--

          A. Each agency, institution and instrumentality of the state and local governments shall, upon request, assist the capital outlay review committee in carrying out its duties.

          B. The agencies that fund exempt capital projects or that approve capital project funding that has not been evaluated by the committee, including community development projects, public school facilities authority projects, transportation projects and loan or grant fund projects, shall provide timely reports to the committee that describe those projects and provide funding amounts and other information requested by the committee to ensure interagency coordination in the evaluation, funding and monitoring of capital projects.

     SECTION 6. [NEW MATERIAL] AUDITS.--The committee may request the legislative finance committee, the state auditor or the capital outlay planning and monitoring division of the department of finance and administration to conduct financial, compliance or performance audits on any capital project.

     SECTION 7. [NEW MATERIAL] SHORT TITLE--CAPITAL OUTLAY PLANNING AND MONITORING ACT.--Sections 7 through 14 of this act may be cited as the "Capital Outlay Planning and Monitoring Act".

     SECTION 8. [NEW MATERIAL] DEFINITIONS.--As used in the Capital Outlay Planning and Monitoring Act:

          A. "capital project" means the acquisition, repair, alteration, demolition, renovation, construction or reconstruction of a public building or other public works owned by the state or a political subdivision, including planning and design and professional engineering, surveying, architectural and landscape architectural services directly related to the capital project; purchase of land for a public building or other public works; site improvements to public property; purchase and installation of equipment of a long-term nature for a public building or other public works; purchase of furniture as part of a renovation or construction of a public building; purchase of motor vehicles or heavy equipment with a life expectancy of five years or more; and hardware and software for voice, radio, video and data communications; and

          B. "division" means the capital outlay planning and monitoring division of the department of finance and administration.

     SECTION 9. [NEW MATERIAL] DIVISION CREATED--POWERS AND DUTIES.--

          A. The "capital outlay planning and monitoring division" is created in the department of finance and administration. The division shall:

                (1) direct capital project planning for the executive branch, for state institutions and for local governments that seek state funding for capital projects, either directly or through coordination with other responsible state and local agencies;

                (2) coordinate with the New Mexico finance authority, the New Mexico mortgage finance authority and federal agencies that provide capital project funding for local governments, other eligible entities and rural areas;

                (3) work with state agencies, state institutions, local governments and the legislature to develop priorities to be funded through the legislature's capital outlay process;

                (4) make recommendations to the governor on capital projects to be proposed for funding by the legislature;

                (5) oversee, either directly or through other responsible state agencies, all state-funded capital projects to ensure timely execution of approved capital projects, proper expenditures of state funding and timely reversion of unexpended balances;

                (6) develop procedures to ensure current and complete accounting and reporting on capital projects;

                (7) maintain a central database on capital projects that includes the up-to-date fiscal and programmatic status of each capital project;

                (8) identify stagnant capital projects that should be deauthorized or capital projects that have been completed and fund balances that should be reverted;

                (9) provide training and assistance to state agencies and political subdivisions on planning, budgeting and administration of capital projects, including proper accounting and monitoring and completion of capital projects within statutory deadlines and the reversion of unexpended funds as required by law; and

                (10) work with the board of finance division of the department of finance and administration to ensure that capital projects authorized by the legislature are properly certified for the issuance of bonds and to ensure that capital projects proceed in a timely manner and meet federal and state requirements.

          B. The division may conduct financial, compliance and performance audits on capital projects on its own or in conjunction with the state auditor or legislative committees.

          C. All state agencies, institutions and instrumentalities shall assist the division as required for the division to carry out its duties.

     SECTION 10. [NEW MATERIAL] PLANNING COMMITTEE.--

          A. The "executive capital planning committee" is created as an interagency and intergovernmental planning and coordination committee to assist the division in carrying out its duties. The committee shall include employees of the following agencies or other entities who have direct responsibility for planning or overseeing capital projects for their agencies or entities:

                (1) the property control division of the general services department;

                (2) the capitol buildings planning commission;

                (3) the cultural affairs department;

                (4) the local government division of the department of finance and administration;

                (5) the department of environment;

                (6) the aging and long-term services department;

                (7) the higher education department;

                (8) the department of transportation;

                (9) the New Mexico finance authority; and

                (10) the councils of governments.

          B. The division shall invite representatives of federal agencies that provide loans and grants to New Mexico communities for infrastructure and other capital projects to participate in meetings of the committee and may invite other participants as it deems necessary.

          C. The division shall not pay per diem and mileage or any other compensation, perquisite or allowance to members of the committee for service in the committee.

          D. The committee shall assist the division in capital planning and the development of the state capital improvements plan.

     SECTION 11. [NEW MATERIAL] STATE CAPITAL IMPROVEMENTS PLAN.--

          A. The division, the property control division of the general services department and the local government division of the department of finance and administration shall, with the assistance of the executive capital planning committee, prepare and annually update a five-year "state capital improvements plan" that details the major capital projects recommended to be undertaken by the state or to be undertaken with state aid or under state regulation. The plan shall:

                (1) include an economic forecast and a discussion of economic activities that bear on the need for state or local infrastructure and how completed capital projects have changed the prior-year plan;

                (2) include a description of outstanding capital projects being funded with state money, their estimated completion date, their initial cost, their estimated completion cost and their estimated operational costs for the first five years;

                (3) classify capital projects with respect to urgency and need for realization;

                (4) recommend a time sequence for construction or purchase of specific capital projects;

                (5) contain an estimated cost of each capital project, as well as the probable operating and maintenance costs of each project;

                (6) identify any revenue that will be generated by a capital project;

                (7) identify existing or additional sources of funds needed for construction and operation of each capital project;

                (8) identify the governmental owner of every capital project; and

                (9) provide other information for any capital project or for the state capital improvements plan as determined by the division.

          B. All capital project recommendations of the executive shall be based on the state capital improvements plan.

          C. A state agency, local government or other potential recipient of state capital outlay funds is not eligible for a capital project if it is not current on its annual audit or has a plan approved by the state auditor for completion of its audit. A local government shall be current on its budget and quarterly report submissions to the local government division of the department of finance and administration.

     SECTION 12. [NEW MATERIAL] CAPITAL PROJECT REQUESTS--GUIDELINES--INFRASTRUCTURE CAPITAL IMPROVEMENTS PLANS--SUBMISSION TO DIVISION.--

          A. By January 15 of each year, the division shall publish capital project guidelines to be followed by all state agencies and local governments that plan to seek partial or full funding for any capital project in the next year's legislative session.

          B. The guidelines shall include provisions to guide state agencies that review capital project requests or infrastructure capital improvements plans from state agencies or local governments. The state capital improvements plan and each local government's infrastructure capital improvements plan shall be updated each year.

          C. The review guidelines shall include:

                (1) requirements for local government infrastructure capital improvements plans to be submitted to appropriate state agencies;

                (2) requirements for analyzing immediate and future needs of the state, regions of the state and localities; and

                (3) requirements for analyzing requests in light of:

                     (a) critical needs of the state, including local governments;

                     (b) the necessity of the capital project to meet a critical need;

                     (c) the necessity of the capital project to address a health and safety concern;

                     (d) the ability of the local government to provide at least matching funds so that the state is not the sole funding source for a local capital project;

                     (e) the availability of other sources for the capital project;

                     (f) the capital project's priority on either the state capital improvements plan or a local government infrastructure capital improvements plan;

                     (g) the ability to phase the capital project, if necessary, and the availability of funding to complete at least one full, functional capital project phase;

                     (h) the ability of the ultimate governmental recipient to provide necessary and adequate staff and funding for operations and maintenance for the capital project;

                     (i) the expected useful life of the capital project;

                     (j) the available alternatives to the capital project as requested;

                     (k) consideration of whether a renovation project will forestall substantial capital outlay costs in the short and long terms;

                     (l) the most appropriate funding sources for types of capital projects; and

                     (m) other considerations determined by the division, after consultation with the executive capital planning committee and the legislative capital outlay review committee.

          D. By May 1 of each year, all infrastructure capital improvements plans are due to state agencies, as follows:

                (1) local government plans that are not otherwise submitted to another state agency are due to the local government division of the department of finance and administration;

                (2) water and wastewater plans that are developed by special districts or the water trust board or that are separate from a municipal or county infrastructure capital improvements plan are due to the department of environment;

                (3) street, road and highway plans from any jurisdiction are due to the department of transportation;

                (4) regional plans that involve more than one local government are due to the local government division;

                (5) area agency on aging or local aging program plans are due to the aging and long-term services department;

                (6) public post-secondary educational institution plans are due to the higher education department;

                (7) state museums and state monuments plans are due to the cultural affairs department;

                (8) state agency plans for state agencies under the jurisdiction of the property control division of the general services department are due to the property control division;

                (9) state and local government plans that are part of master plans approved by the capitol buildings planning commission are due to the capitol buildings planning commission; and

                (10) New Mexico state fair, state parks division of the energy, minerals and natural resources department, state armory board, tribal infrastructure board, colonias infrastructure board, water trust board, New Mexico school for the deaf, New Mexico school for the blind and visually impaired, New Mexico military institute, judicial and any other capital improvement plans or capital project requests that are not specifically assigned to another state agency are due to the division.

          E. All state agencies that are responsible for reviewing capital project requests shall submit their recommendations to the division by August 1 of each year. For local government projects, the recommendations shall include comprehensive analysis of the local government's capacity and effort to fund the requested capital project and its ability to operate the capital project, if applicable.

          F. The division shall review the recommendations and hold hearings on the recommendations by September 15 of each year. The division shall report its findings to the governor and the capital outlay review committee by October 1 of each year. The division's report to the capital outlay review committee shall include proposed changes to the state capital improvements plan and a listing of all capital project requests received, findings of each reviewing agency and findings of the division.

          G. The division shall publish the annual state capital improvements plan, an abstract of which shall be included in the executive budget recommendations for the following fiscal year.

     SECTION 13. [NEW MATERIAL] REPORTS.--Every state agency responsible for capital projects shall file electronic monthly status reports with the division and the capital outlay review committee on appropriations and expenditures.

     SECTION 14. [NEW MATERIAL] CAPITAL PROJECT ADMINISTRATION FUND--CREATED--AUDITS--FEES.--

          A. The "capital project administration fund" is created as a nonreverting fund in the state treasury. The fund consists of appropriations and any other money credited to the fund.

          B. The legislature shall appropriate money in the fund to the division to carry out its duties pursuant to the Capital Outlay Planning and Monitoring Act and to the state auditor's office and the legislative finance committee to conduct audits using agreed-upon procedures of any capital project to ensure compliance with federal laws, internal revenue service rules pertaining to the issuance and use of tax-exempt bonds, other pertinent federal regulations, state laws and any pertinent rule adopted by the state treasurer, board of finance division of the department of finance and administration, state auditor or other state agency. The division shall assist in the identification of capital projects to be audited.

     SECTION 15. Section 6-21-31 NMSA 1978 (being Laws 1992, Chapter 61, Section 31) is amended to read:

     "6-21-31. POWERS AND DUTIES.--The New Mexico finance authority oversight committee shall:

          A. monitor and oversee the operation of the New Mexico finance authority;

          B. meet on a regular basis to receive and review reports from the authority on implementation of the provisions of the New Mexico Finance Authority Act and to review and approve [regulations] rules proposed for adoption pursuant to that act;

          C. monitor and provide assistance and advice on the public project financing program of the New Mexico finance authority;

          [D. oversee and monitor state and local government capital planning and financing and take testimony from state and local officials on state and local capital needs;

          E. provide advice and assistance to the New Mexico finance authority and cooperate with the executive branch of state government and local governments on planning, setting priorities for and financing of state and local capital projects;

          F.] D. undertake an ongoing examination of the statutes, constitutional provisions, [regulations] rules and court decisions governing state and local government capital financing in New Mexico; and

          [G.] E. report its findings and recommendations, including recommended legislation or necessary changes, to the governor and to each session of the legislature. The report and proposed legislation shall be made available on or before December 15 each year."

     SECTION 16. Section 9-6-3 NMSA 1978 (being Laws 1977, Chapter 247, Section 3, as amended) is amended to read:

     "9-6-3. DEPARTMENT OF FINANCE AND ADMINISTRATION--CREATION--TRANSFER AND MERGER OF DIVISION FUNCTIONS--MERGER AND CREATION OF DIVISIONS.--

          A. The "department of finance and administration" is created. The department shall consist of those divisions created by law or executive order, as modified by executive order pursuant to Subsection C of this section, including but not limited to:

                (1) the board of finance division;

                (2) the financial control division;

                (3) the local government division;

                (4) the management and contracts review division; [and]

                (5) the state budget division; and

                (6) the capital outlay planning and monitoring division.

          B. The secretary is empowered to organize the department and the divisions thereof specified in Subsection A of this section and may transfer or merge functions between divisions in the interest of efficiency and economy.

          C. The governor is empowered to merge divisions of the department or to create additional divisions by executive order in the interest of efficiency and economy."

     SECTION 17. Section 9-6-5.1 NMSA 1978 (being Laws 1983, Chapter 296, Section 7) is amended to read:

     "9-6-5.1. PLANNING POWERS AND DUTIES OF SECRETARY OF FINANCE AND ADMINISTRATION.--The secretary of [the department of] finance and administration, in addition to the other powers and duties conferred:

          A. shall review federal grant applications and provide management assistance;

          B. shall coordinate, in accordance with directives from the governor's office of policy and planning, state agency plans for economic, natural resource, energy resource and human resource development;

          C. shall provide aid to planning and development districts in developing grant proposals and cooperate with other local entities in developing grant proposals;

          [D. shall acquire, study and review all plans for capital projects proposed by state agencies and render advice on the plans. The secretary shall maintain long-range estimates and plans for capital projects and develop standards for measuring the need for and utility of proposed projects;

          E.] D. may contract for, receive and utilize any grants or other financial assistance made available by the United States government or by any other source, public or private;

          [F.] E. may provide planning and funding assistance to units of local government, council of government organizations, Indian tribal governments situated within New Mexico and [to] nonprofit entities having for their purpose local, regional or community betterment. The secretary, incident to any such programs, may enter into contracts and agreements with such units of local government, council of government organizations, Indian tribal governments, nonprofit entities and the federal government and may participate in or receive aid from any federal or private program in relation to such a planning program or assistance;

          [G.] F. shall confer with the state budget division [of the department of finance and administration] and the capital outlay and monitoring division in developing comprehensive plans to assure coordination of planning and budgeting functions;

          [H.] G. shall coordinate the state clearinghouse review process;

          [I.] H. shall develop a status of the state report;

          [J.] I. shall review and coordinate comment by state agencies on draft environmental impact statements;

          [K.] J. shall provide community development block grant technical assistance to local governments;

          [L.] K. shall administer, in consultation with and upon advice and direction from the community development block grant policy committee, the program for the state community development block grant program;

          [M.] L. shall serve as staff to the New Mexico association of regional councils;

          [N.] M. shall maintain a state planning library; and

          [O.] N. shall provide planning assistance to county and multi-county districts relative to application by such districts for financial assistance and for regional plan development."

     SECTION 18. TEMPORARY PROVISION--TRANSFER OF FUNCTIONS, MONEY, APPROPRIATIONS AND PROPERTY.--On the effective date of the provisions of this act, all functions, money, appropriations, records, furniture, equipment and other property of the capital projects bureau of the state budget division of the department of finance and administration are transferred to the capital outlay planning and monitoring division of the department of finance and administration.

     SECTION 19. APPROPRIATION.--One million one hundred thousand dollars ($1,100,000) is appropriated from the general fund to the department of finance and administration for expenditure in fiscal year 2014 and subsequent fiscal years to establish the capital outlay and monitoring division and carry out the purposes of this act. Any unexpended or unencumbered balance remaining at the end of a fiscal year shall not revert to the general fund.

     SECTION 20. REPEAL.--Section 6-4-1 NMSA 1978 (being Laws 1975, Chapter 282, Section 3, as amended) is repealed.

     SECTION 21. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2013.

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