Photo by Alfredo D. Ortiz

Waiting until January to cut capital outlay projects isn’t good enough, Governor Bill Richardson said today as he moved to cancel “pork projects.”

The move applies to all capital outlay projects except those that have already made grant arrangements with third parties.

In the final hours of the special session last Friday, Senator Eric Griego, D-Albuquerque, offered a capital outlay amendment to the final bill making cuts to state government.  Griego’s amendment directed state agencies to identify $150 million in capital outlay projects that could be cut in January when the legislature reconvenes.

During the floor debate, Griego said it was unconscionable that legislators would cut public schools or higher education instead of more capital outlay projects. His bill passed on a tie vote, with Lt. Gov. Diane Denish casting the tie breaking vote in favor of the amendment.

But January isn’t quick enough, Richardson said today in a strongly worded statement critical of the state legislature.

“I am taking this bold action since the Legislature chose not to cut even one dime of its pork projects,” Richardson said in the statement. “These pork projects should be the first to be cut before we take any action that affects people.”

The legislature, he pointed out, suggested they look at cutting projects in January, but no action was taken to actually cut the projects.

Richardson concluded that the freeze, which is effective immediately and will include both legislative and executive branch capital outlay projects, will remain in place through the regular legislative session that begins in January.

Rep. Luciano “Lucky” Varela, D-Santa Fe, urged the governor to be careful in what projects his agencies freeze.

“We may find ourselves in a confrontation in terms of folks affected by those projects,” Varela said.

Varela also urged a spirit of collaboration, especially after last week’s bruising special legislative session, in which state lawmakers criticized Richardson on numerous occasions for everything from not cutting spending enough to the number of political appointees he has.

“Let’s work together. Let’s try not to retaliate against each other,” Varela said.

But Richardson made it clear prior to the special session that he thought capital outlay projects should be a primary way that the state balances its budget.  As the Independent’s Trip Jennings reported in September, Richardson urged legislators to “cut pork” and “not cut people.”

“Let’s not make drastic cuts that hurt people. Let’s cut pork, let’s not cut people,” Richardson said Sept. 11 during an appearance at the New Mexico State Fair.

He added, “Let’s cut capital outlay. There’s about $1 billion that isn’t being used.”

Unused capital outlay money often accumulates over time because projects cost more than a legislator is able to allocate in a given year. So, other funds have to be raised, which often takes years. In this regard, while capital outlay dollars may not be spent as soon as they’re allocated,  they generally are being factored into funding efforts for local projects considered important to the communities in which  they’re located.

It was unclear how many brick-and-mortar projects would be frozen. A call to the governor’s office was not immediately returned.

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Photo by Stacy J. Clinton

Hundreds of millions of dollars remain unspent on thousands of brick-and-mortar projects the Legislature has approved in recent years. How much of that cash should be used to address the budget shortfall hasn’t yet emerged as a flashpoint between negotiators for Gov. Bill Richardson and the Legislature as they try to reach a deal. But given recent history, it may well flare up.

The Richardson administration and state lawmakers have previously squared off on this subject, most recently in advance of this year’s regular legislative session. And with a projected mid-year $440 million budgetary shortfall that some lawmakers are predicting may grow to $550 million, unspent “capital-outlay” money — sometimes  called “pork” — is again a part of the mix.

If the clash doesn’t come over how much money to “claw back,” the conflict may well arise over whose “ox gets gored,” as Capitol insiders waggishly put it: the governor’s capital outlay, state agencies’ or lawmakers’ projects.

Richardson has used the unfinished projects as a way to argue against making deeper cuts across state government than the 3 percent he’s suggested cutting from state agencies. Top lawmakers in the negotiations say deeper cuts will be needed, perhaps 5 percent to 6 percent.

“Let’s not make drastic cuts that hurt people. Let’s cut pork, let’s not cut people,” Richardson said Sept. 11 during an appearance at the New Mexico State Fair.

He added, “Let’s cut capital outlay. There’s about $1 billion that isn’t being used.”

Top lawmakers already acknowledge that such unspent money will play a role in closing this year’s shortfall.

A quarterly report from the Legislative Finance Committee, released in July, found that roughly $379 million of money appropriated for brick-and-mortar projects was unspent for the years 2004, 2005, and 2006. The total of unspent money for such projects tops $1.3 billion when factoring in fiscal 2007 and 2008, the report shows.

“I think we’ve identified $120 million in general fund money,” Sen. John Arthur Smith, a Deming Democrat who is chairman of the Senate Finance Committee, said on Friday.

The general fund is the state’s main account. The state uses several types of revenue to pay for capital outlay, including the general fund.

“We think there’s probably $250 million in general fund money that we might be able to use,” Smith added.

State lawmakers are currently examining projects funded in 2003 and 2008 that have a portion of their budgets unspent. Occasionally these unspent balances occur  when the Legislature appropriates only enough money to pay a portion of the total cost, and state lawmakers don’t follow up with more appropriations; sometimes lawmakers ask for money for local projects that local governments don’t see as priorities.

Already tough questions are being raised as to what projects to cut, and where, Smith said.

Many state lawmakers say that such projects produce jobs, and cutting them would be tantamount to hurting the economy.

But regional politics may become an issue.

“There are parts of that state suffering more than others,” Smith said. “But their projects may not be shovel-ready. Can that money be transferred to other projects in other parts of the state? We have a lot of questions.”

Such questions are not abstract for state lawmakers. Some view brick-and-mortar projects as an election-year calling card, as a way at re-election time to say to constituents, “Look at what I’ve done for you,” insiders say.

It’s why many state lawmakers wait on pins and needles every legislative session to see how many of their projects make it onto the omnibus capital bill.

House lawmakers are up for re-election in 2009.