CAPITAL OUTLAY CHANGES

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AN ACT
RELATING TO CAPITAL EXPENDITURES; PROVIDING LIMITATIONS AND
REQUIREMENTS FOR CERTAIN CAPITAL OUTLAY PROJECTS,
REAUTHORIZATIONS AND APPROPRIATIONS; AMENDING SECTIONS OF
LAWS 2022 THROUGH 2025 TO REQUIRE CERTAIN UNEXPENDED GENERAL
FUND CAPITAL OUTLAY APPROPRIATIONS TO REVERT TO THE CAPITAL
DEVELOPMENT AND RESERVE FUND OR THE TRIBAL INFRASTRUCTURE
PROJECT FUND.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. CAPITAL OUTLAY PROJECTS--REAUTHORIZATIONS
AND APPROPRIATIONS--LIMITATIONS.--
A. A capital outlay project shall not be
reauthorized or reappropriated:
(1) more than once;
(2) for a time period greater than two
years; and
(3) unless at least ten percent of the
initial appropriation has been encumbered by January 1 of
that year, as determined by the department of finance and
administration.
B. A capital outlay project may be reauthorized or
reappropriated to make a technical change, but a
reauthorization or reappropriation shall not alter the
original purpose of the capital outlay project. A capital
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outlay project that is reauthorized or reappropriated to make
a technical change is not subject to the encumbrance
requirement provided in Paragraph (3) of Subsection A of this
section.
C. Capital outlay authorizations and
appropriations of one hundred thousand dollars ($100,000) or
more shall not be made for a project unless the project is
included on an infrastructure capital improvement plan.
D. Capital outlay appropriations made from the
general fund shall revert to the capital development and
reserve fund, except for tribal projects that shall revert to
the tribal infrastructure project fund.
E. If severance tax bonds have been issued and no
amount of the proceeds have been encumbered or expended for a
capital outlay project for which bonds were issued by January
1 of the fiscal year in which unexpended balances will
revert, the board of finance division of the department of
finance and administration shall freeze the account, and any
encumbrances after that date shall be considered invalid. If
no amount has been encumbered or expended for a capital
outlay appropriation from the general fund or other state
funds by January 1 of the fiscal year in which the unexpended
balance will revert, the department shall freeze the account,
and any encumbrances after that date shall be considered
invalid. An expenditure does not include a lawful, automatic
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deduction from the total proceeds or appropriation.
F. The department of finance and administration
shall provide an annual report to the legislature by January
15 on the capital outlay projects that have been frozen. The
balances of frozen accounts shall be available for
authorization or appropriation in that fiscal year for other
purposes, subject to any applicable rules and state board of
finance oversight of severance tax bonds, including, as
applicable, requirements of federal tax laws relating to
tax-exempt bonds. Should the proposed authorization or
appropriation of a capital outlay project initially funded
with proceeds of tax-exempt bonds pursuant to this subsection
extend the time for expenditure of such proceeds beyond the
date which is three years from the date of original issuance
of the associated tax-exempt bonds, such authorization or
appropriation shall be permitted only if it has been
demonstrated to the satisfaction of the state board of
finance that the reasons for the failure to expend proceeds
within such time period were unanticipated at the time of the
related tax-exempt bond issue, that such proceeds are to be
expended as promptly as possible, and that the investment and
expenditure of such proceeds will comply with applicable
requirements of federal tax laws governing the associated
tax-exempt bond issue.
G. As used in this section:
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(1) "encumbrance" includes only direct
project costs and excludes administrative fees charged by a
fiscal agent;
(2) "purpose" includes the functionality,
use or primary objective of a project or the type of project
or asset; and
(3) "technical change" means a minor
correction or an adjustment that does not alter the original
purpose of the capital outlay project and includes correcting
a drafting error, changing the administering agency, changing
the fiscal agent or expanding the eligible uses of an
appropriation within the same project.
SECTION 2. Laws 2022, Chapter 53, Section 2 is amended
to read:
"SECTION 2. GENERAL FUND APPROPRIATIONS--LIMITATIONS--
REVERSIONS.--
A. Except as provided in Subsection D of this
section and as otherwise specifically provided by law, the
unexpended balance of an appropriation made in this act from
the general fund shall revert to the general fund:
(1) no later than September 30 following:
(a) the end of fiscal year 2023 if the
project for which an appropriation was made has less than
five percent of the project's total appropriation amount
subject to a binding written agreement with a third party on
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that date;
(b) the end of fiscal year 2024 for a
project for which an appropriation was made to purchase
vehicles, including emergency vehicles and other vehicles
that require special equipment; heavy equipment; books;
educational technology; or other equipment or furniture that
is not related to a more inclusive construction or renovation
project; or
(c) the end of fiscal year 2026 for a
project for which an appropriation was made related to an
inclusive construction or renovation project; or
(2) within six months of completion of the
project for any other project for which an appropriation was
made, but no later than the end of fiscal year 2026.
B. Money that is appropriated from the general
fund pursuant to this act shall not be subject to a binding
written agreement with a third party prior to the authorized
state agency's approval to enter into that agreement.
C. For the purposes of this section, "unexpended
balance" means the remainder of an appropriation after
reserving for unpaid costs and expenses subject to a binding
written agreement with a third party.
D. The unexpended balance of an appropriation made
in this act from the general fund that has not reverted on or
before the effective date of this 2026 act shall revert in
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the time frame set forth in Subsection A of this section to
the capital development and reserve fund, except for tribal
projects that shall revert to the tribal infrastructure
project fund."
SECTION 3. Laws 2023, Chapter 199, Section 1 is amended
to read:
"SECTION 1. GENERAL FUND APPROPRIATIONS--LIMITATIONS--
REVERSIONS.--
A. Except as provided in Subsection E of this
section and as otherwise specifically provided by law, the
unexpended balance of an appropriation made in this act from
the general fund shall revert to the general fund:
(1) no later than September 30 following:
(a) the end of fiscal year 2024 if the
project for which an appropriation was made has less than
five percent of the project's total appropriation amount
subject to a binding written agreement with a third party on
that date;
(b) the end of fiscal year 2025 for a
project for which an appropriation was made to purchase
vehicles, including emergency vehicles and other vehicles
that require special equipment; heavy equipment; books;
educational technology; or other equipment or furniture that
is not related to a more inclusive construction or renovation
project; or
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(c) the end of fiscal year 2027 for a
project for which an appropriation was made related to an
inclusive construction or renovation project; or
(2) within six months of completion of the
project for any other project for which an appropriation was
made, but no later than the end of fiscal year 2027.
B. Except for appropriations to the capital
program fund, money from appropriations made in this act
shall not be used to pay indirect project costs.
C. Money that is appropriated from the general
fund pursuant to this act shall not be subject to a binding
written agreement with a third party prior to the authorized
state agency's approval to enter into that agreement.
D. For the purposes of this section, "unexpended
balance" means the remainder of an appropriation after
reserving for unpaid costs and expenses subject to a binding
written agreement with a third party.
E. The unexpended balance of an appropriation made
in this act from the general fund that has not reverted on or
before the effective date of this 2026 act shall revert in
the time frame set forth in Subsection A of this section to
the capital development and reserve fund, except for tribal
projects that shall revert to the tribal infrastructure
project fund."
SECTION 4. Laws 2024, Chapter 66, Section 1 is amended
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to read:
"SECTION 1. GENERAL FUND APPROPRIATIONS--LIMITATIONS--
REVERSIONS.--
A. Except as provided in Subsection E of this
section and as otherwise specifically provided by law, the
unexpended balance of an appropriation made in this act from
the general fund shall revert to the general fund:
(1) no later than September 30 following:
(a) the end of fiscal year 2026 for a
project for which an appropriation was made to purchase
vehicles, including emergency vehicles and other vehicles
that require special equipment; heavy equipment; books;
educational technology; or other equipment or furniture that
is not related to a more inclusive construction or renovation
project; or
(b) the end of fiscal year 2028 for a
project for which an appropriation was made related to an
inclusive construction or renovation project; or
(2) within six months of completion of the
project for any other project for which an appropriation was
made, but no later than the end of fiscal year 2028.
B. The agencies named in this act shall certify to
the department of finance and administration that the money
appropriated in this act is needed for the purposes specified
in the applicable section of this act. If an agency has not
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certified the need for the appropriation for a particular
project by the end of fiscal year 2026, the authorization for
that project is void.
C. Money that is appropriated from the general
fund pursuant to this act shall not be subject to a binding
written agreement with a third party prior to the authorized
state agency's approval to enter into that agreement.
D. For the purposes of this section, "unexpended
balance" means the remainder of an appropriation after
reserving for unpaid costs and expenses subject to a binding
written agreement with a third party.
E. The unexpended balance of an appropriation made
in this act from the general fund that has not reverted on or
before the effective date of this 2026 act shall revert in
the time frame set forth in Subsection A of this section to
the capital development and reserve fund, except for tribal
projects that shall revert to the tribal infrastructure
project fund."
SECTION 5. Laws 2025, Chapter 159, Section 2 is amended
to read:
"SECTION 2. GENERAL FUND APPROPRIATIONS--LIMITATIONS--
REVERSIONS.--
A. Except as provided in Subsection E of this
section and as otherwise specifically provided by law,
general fund appropriations made pursuant to this act may be
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expended in fiscal years 2026 through 2029; provided that the
unexpended balance of an appropriation made in this act from
the general fund shall revert to the general fund:
(1) no later than September 30 following:
(a) the end of fiscal year 2027 for a
project for which an appropriation was made to purchase
vehicles, including emergency vehicles and other vehicles
that require special equipment; heavy equipment; books;
educational technology; or other equipment or furniture that
is not related to a more inclusive construction or renovation
project; or
(b) the end of fiscal year 2029 for a
project for which an appropriation was made related to an
inclusive construction or renovation project; or
(2) within six months of completion of the
project for any other project for which an appropriation was
made, but no later than the end of fiscal year 2029.
B. The agencies named in this act shall certify to
the department of finance and administration that the money
appropriated in this act is needed for the purposes specified
in the applicable section of this act. If an agency has not
certified the need for the appropriation for a particular
project by the end of fiscal year 2027, the authorization for
that project is void.
C. Money that is appropriated from the general
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fund pursuant to this act shall not be subject to a binding
written agreement with a third party prior to the authorized
state agency's approval to enter into that agreement.
D. For the purposes of this section, "unexpended
balance" means the remainder of an appropriation after
reserving for unpaid costs and expenses subject to a binding
written agreement with a third party.
E. The unexpended balance of an appropriation made
in this act from the general fund that has not reverted on or
before the effective date of this 2026 act shall revert in
the time frame set forth in Subsection A of this section to
the capital development and reserve fund, except for tribal
projects that shall revert to the tribal infrastructure
project fund."
SECTION 6. APPLICABILITY.--The provisions of Section 1
of this act apply to capital outlay appropriations made on or
after January 1, 2027.