It’s a problem that has bedeviled the state for years: Construction projects, supported by millions in capital outlay appropriations, sit idle or move slowly.

In the past, analysts said the reasons for work being delayed or halted ranged from insufficient funds to finish the work to hiring enough employees to get those jobs done.

This year, however, another factor was at play — the pandemic.

Supply chain delays, rising construction costs and short staffing challenges, all byproducts of the pandemic, have contributed to an outstanding capital outlay project fund topping $2 billion, a new Legislative Finance Committee report says.

And since there’s another $2.2 billion in new capital outlay appropriations tied to 1,400 additional state and local projects in the works, that balance is likely to “grow and bottlenecks further tighten,” the report says.

“When funds are not spent in a timely fashion, benefits are delayed,” Nina Chavez, an analyst for the finance committee, told lawmakers during a hearing Thursday.

Those funds, she said “lose value” over time — especially if construction cost increases and other unexpected expenditures diminish the impact of the original capital outlay money.

The Bureau of Labor Statistics reported the cost of nonresidential construction rose 16.7 percent from March 2021 to March 2022, Chavez told the committee members during the presentation.

At stake are the future of some 3,300 active projects in the state. Of those, about 2,000 have not progressed to the point of production, according to the report.



In some cases, remaining balances on unfinished projects may not be too severe. According to the report, of $1.4 million appropriated for security upgrades at magistrate and district courts, just $86,043 remained unspent.

In other cases, unspent funds nearly matched the outlay amount, as in $2.5 million in 2020 allocations targeted toward affordable housing projects in Albuquerque, of which $2.361 million remains unspent.

About $1 million of $1.5 million of capital outlay funding remains unused for parking facilities at the Santa Fe Regional Airport, though that project has begun.

While expenditures are a vital indicator of progress, they remain “an imperfect proxy for success,” the report says. That’s because the state has not yet developed a way to track whether the projects fulfill their purpose or produce expected benefits for the public.

To address the issue, the report says Legislative Finance Committee staff will initiate site visits to state and local capital outlay projects to identify barriers to progress and suggest potential remedies.

Staff members also will prepare a checklist and come up with options for helping local entities with vetting and prioritizing projects.

Lawmakers on the committee had little to say about the report, and the presentation and discussion period took less than half an hour.

Rep. Patricia Lundstrom, D-Gallup, said she wanted to know why so many state Department of Transportation projects remained in the red — meaning, based on a color code assigned to projects within the report, there has been no activity.

No one on hand offered an answer, though the Department of Transportation is scheduled to give an update on its projects before the committee Friday morning.

General Assignment Reporter

Robert Nott has covered education and youth issues for the Santa Fe New Mexican. He is assigned to The New Mexican's city desk where he covers a general assignment beat.

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