Capital Outlay

2015 SNMEDD Legislative Recap

2016 Capital Outlay Request Form

Overview of Capital Outlay Process for Local Entities

Legislative Capital Outlay Funding

Legislative Capital Outlay Funding is for the creation or improvement of a fixed asset that will last at least 10 years.  It may include purchasing equipment or land or making improvements to roads, water and sewer systems, buildings and anything permanently attached to those things.  In the Property Control Act, “capital outlay project” means the acquisition, improvement, alteration, or reconstruction of assets for a long-term character that are intended to continue to be held or used, including land, buildings, machinery, furniture and equipment.  A capital outlay project includes all proposed expenditures related to the entire undertaking (see Section 15-3B-1 NMSA 1978).  It is bricks and mortar and the equipment related to such bricks and mortar, although it has also come to be the purchase and installation of technology.

Although Capital Outlay Funding is primarily for bricks and mortar, a more defined list of eligible projects includes:

  • Rolling stock — vehicles, fire and emergency vehicles, service vehicles, and heavy equipment;
  • Equipment — playground, office, health and safety and kitchen;
  • Emergency — to resolve matters of health, safety and public welfare that have occurred in the past 18 months; and
  • Construction — Planning and design, ADA compliance, new building for services, building additions, code compliance, and (5) purchases of land, buildings and water rights are a few examples.

Capital Outlay funds are not for operating expenses, salaries, materials and supplies, events, brochures, pamphlets and publications, retroactive reimbursements of previous payments, loan payments, anything for the federal government (BLM, BIA, etc.) or anything for a private, nongovernmental entity (nonprofits).

How do we ask for a capital outlay project?  All capital outlay projects must be sponsored by your local legislator.  Inform your legislator of the project, the estimated cost of the project and identify who will benefit from the project and how soon you will need the money.   The project must have a clear and identifiable source of revenue for maintenance and operation after its completion. The project must be included on a local government Infrastructure Capital Improvements Plan (ICIP).  To get the project listed on an ICIP, contact will need to be made with a municipality, county or other recognized unit of government, school or special district.

How soon do we need to spend after we receive the funding?  Rolling stock and equipment and technology purchases using capital outlay funds must be completed within two years.  Emergency funds because of their nature and because some planning and design may be required, must be spent within two years.  And, construction, land acquisition, or building acquisitions must be completed within four years of the funds being made available.  The onus is on the grantee to spend the money.  If the money is not spent in a timely manner the funds will to revert to the State of New Mexico.

It is important that the funds be spent quickly for two reasons.  The Legislature considers these funds to be economic development stimulus monies to help spur or encourage economic development to occur in your community.  And, secondly, Capital Outlay funds are generated from the sale of bonds.  The bonds are essentially loans the state acquires with various revenues pledged by the state to make the loan payments.  Fiscally, it does not make sense to borrow money and pay interest on the loans for money that is sitting in a bank unused.  The bonds are usually for a 10 year period so the proposed project must have a life of at least 10 years or more.

Nonprofit organizations may apply for Capital Outlay funds, but their application must be sponsored by a local unit of government—a county or municipality.  The local government will be the applicant and recipient of the funds and the owner of the project.  What this means is that the local government will own the building, vehicle, equipment or land—whatever the project and the nonprofit agency will need to rent or lease the project from the local government.  This provision is in place to avoid problems with the “anti-donation clause” of the New Mexico Constitution.  If the nonprofit agency already owns the building or project and Capital Outlay funds will be used to renovate or expand the project, the nonprofit agency will need to permanently deed the project over to the local government prior to the funds being made available from the State.  The local government must also agree to serve as the fiscal agent for the project.

Capital Outlay funds do not require a local match.  There is no minimum dollar request  and there is no maximum although, as a rule of thumb projects should not be for amounts  smaller than $25,000.  Projects should be kept to a reasonable dollar amount considering the funding available to the Legislature for these types of projects.  Last year approximately $562 million dollars in projects were funded with Capital Outlay funds.  However, approximately $6.2 billion in projects was requested.

Applications may be requested by contacting the SNMEDD.