SENATE BILL 455

54th legislature - STATE OF NEW MEXICO - first session, 2019

INTRODUCED BY

Pete Campos

AN ACT

RELATING TO CAPITAL EXPENDITURES; ENACTING THE CAPITAL OUTLAY REFORM ACT; CREATING THE CAPITAL OUTLAY COMMITTEE; CREATING THE CAPITAL PROJECTS TASK FORCE; CREATING THE CAPITAL PLANNING AND ASSISTANCE DIVISION OF THE DEPARTMENT OF FINANCE AND ADMINISTRATION; PROVIDING FOR AN ANNUAL CAPITAL OUTLAY EXPENDITURE PROPOSAL; PROVIDING FOR AN ANNUAL STATE CAPITAL IMPROVEMENTS PLAN; MAKING AN APPROPRIATION.

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

     SECTION 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 9 of this act may be cited as the "Capital Outlay Reform Act".

     SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the Capital Outlay Reform Act:

          A. "capital project":

                (1) means the acquisition, repair, alteration, demolition, renovation, construction, reconstruction, furnishing or equipping of a public building, a public work, a motor vehicle or heavy equipment that:

                     (a) is owned by an eligible entity;

                     (b) is located wholly in New Mexico; and

                     (c) has a useful life of at least six years;

                (2) includes:

                     (a) the planning, design and professional engineering, surveying, architectural and landscape architectural services that are directly related to a capital project;

                     (b) when for a public building or public work, the purchase of: 1) rights of way; 2) easements; 3) land; 4) property; 5) water rights; and 6) site improvements;

                     (c) the purchase and installation of equipment with a useful life of at least six years for a public building or other public work;

                     (d) the purchase of furniture and fixtures as part of a capital project; and

                     (e) a project that does not result in a capital asset with a useful life of at least six years if the project: 1) consists of the demolition of a capital asset; 2) consists of watershed or forest improvements; 3) is an economic development project funded in accordance with the Local Economic Development Act; or 4) is deemed by the task force as being one for which funding with capital outlay resources is in the best interest of the state; and

                (3) does not include:

                     (a) capital projects whose funding derives solely from a loan or grant from the New Mexico finance authority, the water trust board, the tribal infrastructure board, the colonias infrastructure board or a combination of those sources; and

                     (b) road projects funded by the department of transportation pursuant to the statewide transportation improvement plan;

          B. "committee" means the capital outlay committee;

          C. "division" means the capital planning and assistance division of the department of finance and administration;

          D. "government entity" means:

                (1) a state agency, a state institution or a political subdivision of the state that is in compliance with the Audit Act; or

                (2) a federally recognized Indian nation, tribe or pueblo located wholly or partially in New Mexico that is in compliance with its tribal or pueblo government's requirements to ensure fiscal responsibility;

          E. "infrastructure capital improvements plan" means a planning document developed by a government entity that includes capital improvement priorities over a five-year period, that is developed and updated annually and that includes policy directives, funding time frames, estimated costs, justifications and details of each proposed capital project;

          F. "state capital improvements plan" means a planning document developed by a state agency or a public institution of higher education that includes capital improvement priorities over a five-year period, that is developed and updated annually and that includes policy directives, funding time frames, estimated costs, justifications and details of each proposed capital project;

          G. "state capital improvement project" means a project on behalf of a state agency or a public institution of higher education for the purchase of or improvements to property owned by a state agency or a public institution of higher education; and

          H. "task force" means the capital projects task force.

     SECTION 3. [NEW MATERIAL] CAPITAL OUTLAY COMMITTEE-- CREATED--MEMBERSHIP--SUBCOMMITTEES--STAFF.--

          A. The "capital outlay committee" is created as an interim committee of the legislature and consists of sixteen members as follows:

                (1) eight members of the house of representatives appointed by the speaker of the house of representatives; and

                (2) eight members of the senate appointed by the senate committees' committee or, if the appointments are made during the interim, by the president pro tempore of the senate after consultation with and agreement of a majority of the members of the committees' committee.

          B. The members of the committee shall be appointed from each chamber so as to give the two political parties having the most members in each chamber the same total proportionate representation on the committee as prevails in that chamber; 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 fewer than one member from each chamber.

          C. The New Mexico legislative council shall appoint a chair and vice chair of the committee. During the fifty-fourth legislature, a member of the senate shall serve as the chair, and a member of the house of representatives shall serve as the vice chair. Thereafter, the seats of chair and vice chair shall alternate between the two chambers for each biennial legislature.

          D. The chair of the committee may create a subcommittee of the committee that consists of at least two members from the house of representatives and two members from the senate and whose legislative members collectively represent the two major political parties.

          E. The legislative council service shall provide staff for the committee. Staff from the division and from the legislative finance committee shall assist legislative council service staff in performing committee-related functions.

     SECTION 4. [NEW MATERIAL] CAPITAL OUTLAY COMMITTEE-- POWERS AND DUTIES.--

          A. The committee shall:

                (1) monitor the task force's work related to, and progress on making recommendations for, a state capital improvements plan and capital project expenditure authorization legislation;

                (2) by April 1 of each year, identify general categories of infrastructure needs and establish broad, objective criteria and a scoring methodology for state agencies and the task force to employ when recommending or selecting proposed capital projects for inclusion in the state capital improvements plan and capital project expenditure authorization legislation;

                (3) consult with the task force and the division on the development and approval of annual updates to the state capital improvements plan and of capital project expenditure authorization legislation; and

                (4) by December 15 of each year, report to the legislature and the governor pursuant to Subsection E of Section 7 of the Capital Outlay Reform Act.

          B. The committee may direct its staff to research requests from legislators for capital projects that are not included in the proposed state capital improvements plan or its proposed update, or in the proposed capital project expenditure authorization legislation.

     SECTION 5. [NEW MATERIAL] CAPITAL PROJECTS TASK FORCE CREATED--MEMBERSHIP--SUBCOMMITTEES--STAFF.--

          A. The "capital projects task force" is created and consists of nine members as follows:

                (1) two public members appointed by the New Mexico legislative council who have expertise in the planning, engineering, design or construction of large commercial or public capital projects;

                (2) the director of the legislative council service;

                (3) the director of the legislative finance committee;

                (4) the secretary of general services;

                (5) the secretary of finance and administration;

                (6) two persons appointed by the governor who have expertise in the planning, engineering, design or construction of large commercial or public capital projects; and

                (7) a person appointed by the chief justice of the New Mexico supreme court.

          B. The task force shall appoint two co-chairs of the task force. The initial co-chairs shall include the secretary of finance and administration and shall serve for two years. The succeeding co-chairs shall include the secretary of general services and shall serve for two years. The designation of the co-chairs shall alternate every two years thereafter.

          C. A co-chair of the task force may create a subcommittee of the task force that consists of at least one member appointed by the New Mexico legislative council, one cabinet secretary and the appointee of the chief justice of the New Mexico supreme court.

          D. The legislative finance committee shall provide staff for the task force. Staff from the division, the legislative council service and the administrative office of the courts shall assist legislative finance committee staff in performing task force-related functions.

     SECTION 6. [NEW MATERIAL] CAPITAL PROJECTS TASK FORCE-- POWERS AND DUTIES.--

          A. The task force shall propose an annual update of the state capital improvements plan.

          B. A state capital improvements plan shall:

                (1) span at least five future years;

                (2) be based on best practices in, and national standards for, capital budgeting;

                (3) detail the capital projects recommended for state funding and identify which of those projects would fall under state regulation;

                (4) include a summary of changes from the prior year's plan;

                (5) include capital projects geographically diverse from one another;

                (6) prioritize capital projects recommended for funding using the project-selection criteria and scoring methodology established by the committee;

                (7) classify capital projects with respect to urgency and need;

                (8) identify, for each capital project:

                     (a) a recommended time sequence for construction or purchase;

                     (b) the estimated cost;

                     (c) the estimated overall cost of operation and maintenance;  

                     (d) the revenue, if any, that will result from the capital project;

                     (e) existing or additional sources of funding needed for project construction, operation and maintenance;

                     (f) the eligible entity of ownership; and

                     (g) the entity that will operate it;

                (9) include a description of outstanding capital projects authorized for funding with state money, and, for each:

                     (a) the estimated completion date; and

                     (b) the initial cost, estimated completion cost and estimated first-five-years operational cost; and

                (10) include other capital project or state capital improvements plan information, if any, required by the task force or the committee.

          C. The task force shall recommend capital projects for funding with state money only if they are included in the current state capital improvements plan or its proposed annual update.

          D. By May 1 of each year, using the project-selection criteria and scoring methodology established by the committee pursuant to Paragraph (2) of Subsection A of Section 4 of the Capital Outlay Reform Act, the task force shall develop a process for evaluating capital project requests that include as considerations:

                (1) the critical needs, including the public health and safety needs, the capital project would address;

                (2) if the government entity proposing the capital project is not a state agency or instrumentality, the ability of the entity to secure matching funding from nonstate sources for the capital project and the identification of the state entity or political subdivision that will act as fiscal agent;

                (3) the availability of other sources of funding for the capital project, including funding from state and federal planning and funding agencies and instrumentalities;

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

                (5) the ability of the government entity proposing the capital project to provide for the operation and maintenance of the capital project;

                (6) the estimated useful life of the capital project;

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

                (8) the possibility of renovation as a means to minimize substantial capital outlay spending in the short and long terms;

                (9) the most appropriate funding source or sources for the type of capital project; and

                (10) other capital project elements, if any, identified as evaluation considerations by the task force.

          E. By November 1 of each year, the task force shall submit the proposed state capital improvements plan and the current priority list of capital projects to the committee pursuant to Subsection D of Section 7 of the Capital Outlay Reform Act.

     SECTION 7. [NEW MATERIAL] CAPITAL PROJECTS REVIEW PROCESS.--

          A. By May 1 of each year, a government entity applying for the approval of a capital project for the fiscal year beginning July 1 of the next calendar year shall submit to the division the entity's infrastructure capital improvements plan. The infrastructure capital improvements plan shall span at least five fiscal years, beginning July 1 of the next calendar year, and shall be limited to five projects for each year that shall be ranked in priority. A government entity applying for the inclusion of a capital project in the state capital improvements plan shall follow the application guidelines established by the task force. The division shall forward the entire infrastructure capital improvements plan, or a portion of that plan of a government entity, to the appropriate state agency for its review.

          B. By July 1 of each year, a state agency that receives a proposal for state funding of a capital project proposed by a government entity other than that state agency shall review the proposal and shall advise the task force and the division whether the capital project should be funded with state money, using the selection criteria and methodology developed by the committee. The recommendations of a state agency shall include a comprehensive analysis of the government entity's capacity and effort to fund the requested capital project from sources other than the state and its ability to operate and maintain the capital project, if applicable.

          C. By September 1 of each year, the committee shall advise the task force of the committee's best estimate of the total amount of funds that may be available for capital projects for the following fiscal year. The sources for these funds shall include severance tax bonds, nonrecurring general funds, general obligation bonds and other state funds.

          D. By November 1 of each year, the task force shall submit to the committee the proposed updated state capital improvements plan and the current priority list of capital projects to the committee. The priority list of capital projects shall be based on the project-selection criteria and scoring methodology established by the committee. The total projected cost of capital projects recommended by the task force shall not exceed seventy percent of the total amount of funds that may be available for capital projects for the following fiscal year as determined by the committee pursuant to Subsection C of this section. At least forty percent of the total amount of funds that may be available for capital projects for the following fiscal year as determined by the committee pursuant to Subsection C of this section shall be allocated to state capital improvement projects.

          E. By December 15 of each year, the committee shall report to the legislature and the governor regarding its approval of an annually updated state capital improvements plan and its endorsed capital project expenditure authorization legislation for the following fiscal year.

     SECTION 8. [NEW MATERIAL] CAPITAL OUTLAY PROJECT FUNDING--COMPLIANCE REQUIREMENTS.--Funding for a capital project shall be released only if the government entity sponsoring the capital project is in compliance with:

          A. budget and quarterly report submissions to the local government division of the department of finance and administration or the public education department, as applicable; and

          B. capital project-related reporting requirements established by the division.

     SECTION 9. [NEW MATERIAL] REPORTS.--A government entity whose capital project is authorized by the legislature for funding shall electronically file with the division quarterly status reports on project appropriations, encumbrances and expenditures.

     SECTION 10. 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] regularly 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 proposed for adoption pursuant to that act;

          C. monitor, [and provide assistance and advice] assist and advise 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]

          D. assist and advise the [New Mexico finance] authority and cooperate with the executive branch of state government and local governments on planning, setting priorities for and the financing of state and local capital projects;

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

          [G.] F. 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 of each year."

     SECTION 11. 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] capital planning and assistance division; and

                (5) the state budget division.

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

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

     SECTION 12. A new section of Chapter 9, Article 6 NMSA 1978 is enacted to read:

     "[NEW MATERIAL] CAPITAL PLANNING AND ASSISTANCE DIVISION--POWERS AND DUTIES.--

          A. The capital planning and assistance division shall:

                (1) provide information and reports as requested by the capital projects task force and the capital outlay committee;

                (2) receive infrastructure capital improvements plans from entities applying for capital project funding and forward each plan, either in its entirety or relevant portions of it, to the appropriate state agency for review;

                (3) receive state agency recommendations on infrastructure capital improvements plans, receive government entities' identified priorities for capital project funding and, by September 1 each year, make recommendations to the capital projects task force on the development of the state capital improvements plan;

                (4) assist government entities with the development and implementation of their annual multiyear infrastructure capital improvements plans and preventive maintenance plans;

                (5) provide training and assistance to government entities on the planning, budgeting and administration of capital projects, including training and assistance related to:

                     (a) the proper accounting, monitoring and completion of capital projects; and

                     (b) compliance with laws imposing project deadlines and requiring the reversion of unexpended project funds;

                (6) develop procedures to ensure current and complete accounting and reporting on capital projects authorized by the legislature for funding;

                (7) maintain a central database on capital projects that:

                     (a) includes the fiscal and programmatic status of each capital project; and

                     (b) allows for government entities that sponsor capital projects authorized by the legislature for funding to file electronic, quarterly status reports on appropriations, encumbrances and expenditures that also include other information, if any, required by the capital planning and assistance division;

                (8) facilitate the timely execution of capital projects, the proper expenditure of state money and the timely reversion of unexpended capital project balances and oversee, either directly or indirectly through the state agency charged with overseeing the project, all capital projects authorized by the legislature for funding;

                (9) identify stagnant capital projects authorized by the legislature for funding and make recommendations to the capital projects task force as to those capital projects' reauthorization or deauthorization;

                (10) cooperate with government entities that sponsor capital projects authorized by the legislature for funding to ensure that each capital project proceeds in the time frame required by the capital project expenditure authorization legislation authorizing funding for the project and to ensure that capital projects meet applicable federal and state requirements;

                (11) provide to the legislative council service no later than one-fourth of the number of days of a regular session after the commencement of that session, the information on capital projects required for the legislative council service to draft capital project expenditure authorization legislation;

                (12) before the date funding for capital projects becomes available, report to the state board of finance on whether, for each capital project authorized by the legislature for funding, the government entity sponsoring the project is in compliance with:

                     (a) budget and quarterly report submissions to the local government division of the department of finance and administration or the public education department, as applicable; and

                     (b) capital project-related reporting requirements established by the capital planning and assistance division; and

                (13) promulgate rules defining the capital planning and assistance division's statutorily established powers and duties.

          B. The capital planning and assistance division may evaluate, for compliance and performance, capital projects authorized by the legislature for funding.

          C. When developing recommendations regarding the state capital improvements plan, the capital planning and assistance division and reviewing state agencies shall coordinate with other capital project planning and funding agencies and instrumentalities in the state, including the New Mexico finance authority, the water trust board, the tribal infrastructure board, the colonias infrastructure board and the public school capital outlay council, and shall coordinate with the federal agencies that provide capital project funding for state and local governments, to:

                (1) ensure that the capital projects task force has the information it needs to, as appropriate, consider the infrastructure improvement needs in the state and the funding sources available to satisfy those needs; and

                (2) allow the capital projects task force to prioritize those needs according to the capital outlay committee-established project-selection criteria and scoring methodology.

          D. The New Mexico finance authority, the water trust board, the tribal infrastructure board and the colonias infrastructure board shall regularly report to the capital planning and assistance division on:

                (1) the capital project proposals received from government entities by the New Mexico finance authority, water trust board, tribal infrastructure board or colonias infrastructure board as part of the authority's or board's funding application process;

                (2) the capital projects sponsored by those government entities and selected by the New Mexico finance authority, water trust board, tribal infrastructure board or colonias infrastructure board for funding and, for each project selected:

                     (a) the amount of funding awarded; and

                     (b) whether that award is sufficient to fund: 1) the entire project; or 2) an identifiable, discrete phase of the project; and

                (3) the New Mexico finance authority's, water trust board's, tribal infrastructure board's or colonias infrastructure board's annual and long-range plans.

          E. The department of transportation shall regularly report to the capital planning and assistance division on the department's annual and long-range state transportation infrastructure plans.

          F. The capital planning and assistance division shall include in the state capital improvements plan the plans submitted in accordance with Paragraph (3) of Subsection D and Subsection E of this section.

          G. A government entity that applies for capital project funding or whose capital project is authorized by the legislature for funding shall cooperate with the capital planning and assistance division as necessary for the division to perform its duties in accordance with this section.

          H. The capital planning and assistance division shall regularly update the capital projects task force and the capital outlay committee on the status of proposed, ongoing and completed capital projects."

     SECTION 13. TEMPORARY PROVISION--TRANSFER OF FUNCTIONS, MONEY, APPROPRIATIONS AND PROPERTY.--On the effective date of this act, all functions, money, appropriations, records, furniture, equipment and other property of the capital outlay bureau of the state budget division of the department of finance and administration are transferred to the capital planning and assistance division of the department of finance and administration.

     SECTION 14. REPEAL.--Section 6-4-1 NMSA 1978 (being Laws 1975, Chapter 282, Section 3, as amended) is repealed.

     SECTION 15. APPROPRIATION.--

          A. One hundred thousand dollars ($100,000) is appropriated from the general fund to the legislative council service for expenditure in fiscal year 2020 to implement the provisions of the Capital Outlay Reform Act. Any unexpended or unencumbered balance remaining at the end of fiscal year 2020 shall revert to the general fund.

          B. One hundred thousand dollars ($100,000) is appropriated from the general fund to the legislative finance committee for expenditure in fiscal year 2020 to implement the provisions of the Capital Outlay Reform Act. Any unexpended or unencumbered balance remaining at the end of fiscal year 2020 shall revert to the general fund.

     SECTION 16. EFFECTIVE DATE.--The effective date of the provisions of this act is January 1, 2020.

- 24 -