October 13, 2016 1 Join int r remarks o of Associa iatio ion o - - PowerPoint PPT Presentation

SLIDE 1

October 13, 2016

1

SLIDE 2

 Join

int r remarks o

• f Associa

iatio ion o

• f Countie

ies, M Munic icip ipal L l League, Legislative ve F Finance C Committe ttee, a and the D Departm tment t of Finance a and A Admin inis istra ratio ion

 Framing the Issu

Issues

 Cou

• unty a

and M Munici cipal S Surve vey R Results ts

 Stat

ate Age Agency P y Persp spectives

 Admin

inis istra rativ ive C Changes U Underw rway

 Recommended L

Legislative C Chan ange ges

2

SLIDE 3

 We

e are re all re ll respon ponsible le to e to ensure re capita pital ou l outla tlay fundin ding g cr creat eates a a hi high h “retur urn o

• n

n inv nvestment” to: to:

• Improve health and safety;
• Improve quality of life;
• Create and retain jobs; and
• Provide other critical government services.

3

SLIDE 4

 Over

er th the e nex ext t fi five e yea ears, th the e Sta tate te ant antic icipates is issui uing $1. $1.8 billi

illion in in bonds to f fund und st stat ate an and l local c cap apital outlay. ay.

 New M

Mexico F

• Finance A

Auth thor

• rity

ty a antici cipate tes i issuing another er $0.8 billi illion in in bonds.

 Ab

Abse sent significa cant t improve vements ts t the entire re c capit ital outla lay syst system w will:

• Continue to frustrate State and local stakeholders;
• Continue to provide clear consistent guidelines;
• Continue to underfund projects; and
• Continue to negatively impact infrastructure needs.

 Project

ct f funding ing will ill only nly b be suf uffic icient if it it is is direc ected ted a at t prio riorit itized, f fully lly-fu funded, a , and re read ady-to to-go p

• projects

ts.

4

SLIDE 5

Th The cu curre rrent t proce rocess allow allows for

• r hundreds of
• f

million millions of

• f bon
• nd proc

roceeds to to sit it id idle le, , unab able to to be e ex expen ended to cr creat eate infrastructure econ conomi mic c activ activity ity.

5

SLIDE 6

 IC

ICIP IP – each f fall ll lo local l entit ities ide identif ify t their ir c capit pital l prio priorit ritie ies.

 Legis

isla lativ ive S Sessio ion – Gov

• vernor
• r alloc
• cate

tes 1/3 of

• f c

capacity ty to a to a ha hand ndful

• f state a

agency f facilit ility pro projects. . Legis islature re receives o

• ver 5

r 5,0 ,000 capita tal outl

• utlay r

reque uests f from

• m loc
• cal enti

ntiti ties a and nd non non-pr profit its. .

 Capit

pital bill bill authoriz izing a abo bout 1 1,0 ,000 pro projects, le , less Go Govern rnor v r vetoes, , is is enacted. d.

 Bond I

d Issuance – Each of the ro roughly ly 1 1,0 ,000 pro project re recipie ipients re return rns a bond

• nd que

uestionnaire to to the the S SBOF to to dete termine w whe hether b bond

• nds can

n be be is issued f d for r each pro project.

 Loc

• cal g

grant ntees a and nd sta tate te a agency g granto ntors e ente nter I Inte ntergov

• vernmental

Grant nt A Agreements ( (IGA) s setti tting s scop

• pe of
• f wor
• rk a

and nd te terms ms e each mus h must t fol

• llow
• w thr

throu

• ugh the

the l life of

• f the

the p proj

• ject.

t.

6

SLIDE 7



Loc

• cal gra

rante tees proc rocure re thi third-party goods s an and se services an and request st stat ate gra ranto tor approv roval of

• f a Noti
• tice of
• f Obligation (N

(NOO) ) to to enc encumber r a porti

• rtion
• n
• f
• f projec

roject’s bud udget et.



Onl nly after ter sta tate te gra rant ntor r approv roval of

• f an

n NOO, loc

• cal enti

entities enter enter thi third rd- party rty contr

• ntracts to

to rec recei eive good

• ods and

nd serv ervices.



Loc

• cal gra

rante tees sub ubmit rei reimbursement req reques uests to to sta tate te gra rant ntors rs.



Sta tate e gra rant ntors rs rev review ew rei reimburs rsement req reque uests, req reque uest t any ny nec necessary ry corre

• rrections, then

then forw

• rward

rd to to SBOF F to to dra raw dow

• wn

n bond

• nd proc

roceed eeds.



SBOF tra transfers bond

• nd proc

rocee eeds to to sta tate te gra rant ntor r agen encies.



Sta tate e gra rant ntor r agen ency rei reimburses loc

• cal gra

rantee ee.



Loc

• cal gra

rante tee pays ys vend endor

• rs.

7

SLIDE 8

DFA

A alone

• ne hous

houses es sev ever eral d disti tinct of

• ffices

es tha that t ea each h play a criti tical rol

• le i

e in n admini nistering c capita tal outl

• utlay:
• Local

al Govern rnment Div ivis isio ion – enters gran rant ag agre reements, re revie iews re reim imbursement re requests, train rains lo locals als on ICIP, ad admin inis isters Trib ribal al Infrastr tructu ture Fund (Other er g grantor a agen enci cies i incl clude D e DOT, T, ALTS TSD, I , IAD, O , OSE, E, NMED ED, et , etc.) c.).

• Stat

ate Boar ard of Fin inan ance - bon bond d issue uer a and d pr proc

• cessor of
• f reimbu

bursement requests ts.

• Fin

inan ancial C ial Contro rol D l Div ivis isio ion – generat rates paym ayments an and contro rols stat atewid ide ac accountin ing.

• Cap

apit ital O al Outlay lay Bureau au – ex execu ecutive reco ecommen endations on pro roje ject fund unding ng.

• Admin

inistrat ativ ive Servic ices Div ivis isio ion – coordin inat ates p paym ayment in inform rmat ation an and ac accountin ing entrie ries t to the general le al ledger in in SH SHARE.

8

SLIDE 9

DFA

DFA ensures ac accountability for tax axpay payer do dollar ars by by en enforcing g gra rant a agreem reements, t , the e antid idonatio ion c cla lause, , proc

• curement s

t sta tandards, I IRS bon

• nd restr

tricti tions, a and oth

• ther

la laws a and polic licie ies.

If you

• u hear th

that t som

• meth

thing i is “s “stu tuck a at t DFA,” ” th that c t can mea mean a ma many dif iffere erent t thin ings. Pleas ase e call S ll Step ephanie ie Schardin C Cla lark rke o e or r Ric ick L k Lopez ez so that DFA can assis ist in in findi ding a a sol

• luti

tion.

Res

esea earching thes ese is e issues es often en uncovers a a comm mmunication brea reakdown s somew mewhere bet etwee een a lo local l admin ministrator and a a stat ate ag agency.

9

SLIDE 10

 The entire

tire c capita pital ou l outla tlay proc process is is extre tremely cumb mbers rsome

• me:
• There are no written guidelines for necessary

documentation on reimbursements; and

• A “Helpful Hints" section would be useful for officials or

new staff who are not familiar with the process considering turnover may occur every two years.

 Unforesee

een heal ealth an and saf afet ety issues es ( (i.e.

• e. ar

arsen enic) encountered du durin ring th the proc process shou

• uld be

be ta take ken in into to con

• nsideratio

ion re rega gardi rding th the time timeframe for

• r

com

• mple

letio ion of

• f th

the proje project.

10

SLIDE 11

 The aw

awar ard p process t s tak akes t too l long f from t the p point o

• f issu

ssuance

• f the b

bonds t to executing a a gr gran ant agr agreement:

• It can take as long as 9 to 12 months to receive an executed grant

agreement.

 Duplication o

• f in

information in in the f form rms u used b by vario rious agen encies es - for e r exa xample:

• DFA/LGD ICIP Form due Sept 1;
• Legislative Capital Outlay Request Form due prior to mid point of

session;

• Executive Capital Outlay Survey/Questionnaire Form due before

the bill is signed; and

• State Board of Finance Questionnaire Form (Information needed

prior to issuance of the bonds).

11

SLIDE 12

 Al

All the f forms e s esse ssentially r y require t the sam same t typ ype of information, but in in dif ifferent f form

• rmats. R

Require a a univers rsal f form rm t to be used by y al all st stat ate age agencies. s.

 The s

e schedu edule f e for local g governmen ents t to compl mplet ete t e the projec ect shou

• uld b

begin u upon

• n th

the r receipt o t of f execu cute ted c capital o

• utl

tlay gr gran ant agr agreement.

 Written g

guidelines o

• r a checklist

st f for completing n necessar ssary y documentatio ion w would ld b be extremely ly h help lpful f l for local l go

• governments. Guidelines may r

ay reduce t the time sp spent b by y st stat ate age agencies an and l local go governments c s clar arifying d dead adlines. s.

12

SLIDE 13

 Ca

Capi pital outl

• utlay p

proc

• ces

ess i is ver ery cum umber ersome: e:

• Lengthy amount of time to go through all the processes;
• Lack of clear guidelines and consistency;
• Delays in receiving funds and in obtaining information once the grant

is awarded; and

• Problems with identified fiscal agents.

 Ma

Many p projec

• jects

ts d do

• not

not rec ecei eive a e adeq equa uate te fund unding:

• Small awards for large projects; and
• Inability to fully fund projects.

 Ap

Approp

• priations m

made e to to nonp nonprofit or

• r quasi-gov
• ver

ernmen ental agenc encies es:

• County named as fiscal agent without consent and/or knowledge of a

project; and

• Other anti-donation issues.

13

SLIDE 14

 How

• w to

to impro improve th the proc process:

• Make the process more transparent;
• Allocate capital funds for high priority needs (i.e.,

roads, water, acequias, senior centers, etc.); and

• Take into account project timelines when

developing grant agreements (e.g., road projects usually take place during the summer but contracts are often not received until the winter, thereby delaying completion of the project by a year or more).

14

SLIDE 15

 Hold e

educational w workshops w s with l legi gisl slators e every y ye year ar b before the se sessi ssion b begi gins o

• n the c

cap apital outlay p process to cover:

• Uses and other guidelines for severance tax bond allocations;
• Third party agreements with non-profits, services in lieu of rent

payments, and the length of time needed to review and respond to third party agreements;

• Clarification on the anti-donation clause rules; and
• Guidance for preventing capital requests that have legal issues,

aren’t ready, or other impediments for implementation.

 Encoura

rage le legis islators rs in in the s same d dis istri ricts a and re regio ions t to meet w wit ith lo local o

• ffic

icials to dis iscuss t their ir c capit ital o

• utlay,

legi gislative p policy concerns, s, n needs, an and i issu ssues.

 Invol

• lve

ve th the Cou Councils of Gover ernmen ent.

15

SLIDE 16

Reduce P e Prolifer eration

• n:

 About 1,000 new projects are appropriated by the legislature

• annually. This watering down of capacity is unheard of in
• ther states.

 Eac

ach p project h has si as sign gnificant f fixed c cost sts, r regar gardless ss o

• f project

size: e:

• Multiple layers of project and legal review;
• Separate budget in SHARE;
• Intergovernmental grant agreement;
• CMPS reporting;
• Reimbursement requests; and
• Reversion analysis.

16

SLIDE 17

 With

th all o ll of these an and o

• ther si

sign gnificant fixe ixed cost sts, s, st stat ate an and local r reso sources ar s are too t thin t to ab abso sorb an and t to ad administer su such projects s successfully lly. Prolif ifera ratio ion o

• f so many s

small p ll projects ensures eve veryon

• ne i

invol

• lved w

will c con

• nti

tinue to to b be fr frustr trated.

17

SLIDE 18

18

SLIDE 19

Prio

Priori ritize c crit ritical in infra rastructure ov

• ver n

non

• n-esse

sential al p projects. s.

Coor

• ordinate

te Project F Funding g Stream ams: s:

• Too many projects are unnecessarily funded from many sources with

different deadlines, criteria and oversight requirements.

Streamlin

line an and S Stan andardize F Forms t s to Sav ave Time a and E Energy. gy.

Limit

t Pro Projects f for r Non-Pro rofit its:

• Anti-donation clause compliance on projects with private operators adds

staff and legal costs, delays project completion and requires issuance of more costly taxable bonds.

19

SLIDE 20

Ensure

re Pro Projects a are re Ready w when Authori rized:

• Projects that aren’t ready cannot create economic activity.
• Failure to expend 85% of tax-exempt proceeds within 3 years of

bond issuance jeopardizes the tax-exempt status of the bonds.

• Projects that still need to accumulate additional funding, permits,

zoning changes, federal approvals, etc. are not ready and should not be included in the capital bill.

• Capacity must be set aside every year for a project until it is
• issued. Currently, $21.9 million from the 2015 and 2016 sessions

has to be taken off the top of 2017 Session capacity.

20

SLIDE 21

SBOF’s p

s pap aperless, s, w web-base ased q questionnaire syst system dram amatically y streamlin lined local go government su submiss ssion an and st stat ate re revie iew.

Executive O

Order 2 2013-006 im imposed re require rements re rela lated to local au audits as as a a precursor t to receiving S Stat ate cap apital funding. g.

The l

list st of au authorized b but unissued p projects i is s published on t the SBO SBOF websi site.

Pro

Projects w wit ith antidonation is issues a are re no lo longer is r issued w wit ith con

• nditions to

to minimize th the ti time bond p proce ceeds s sit t idle.

21

SLIDE 22

Bond questio

ionnair ires w will l now b be dist stributed an and d due to SBOF within t the G Governor’s b s bill si sign gning p period, al allowing b bonds t to be sold ld m more re quic ickly ly.

The

e Local G Government t Division

• n generate

ted 2 2016 g 6 grant t agr agreements m more q quickly t y than an i in ye year ars s past ast.

DFA w

will ill b be surv rveying a all ll gr gran antor age agencies o s on t their c current processe ses s to identify b best st prac actices an and p presc scribe st stan andard ap approaches.

22

SLIDE 23

Create a

a st stat atewide c cap apital outlay p y plan anning coun uncil w with h executi tive a and l legislati tive ve r representa tati tion

• n to increase

prio riori ritization a and re reduce p pro roli liferation a and p pie iecemeal fund unding.

Review th

the ICIP o

• f

f loca cal g gove vernments ts i in your d distr trict to ct to consider their ir i identif ifie ied prio riori rities.

Work together t

r to full lly f fund a a sm smal aller n number of l lar arge ge, , re regio ional projects ts th that d t deve velop criti tica cal i infr frastructure.

Fund c

cap apital asse assets w s with a a use seful l life at at leas ast as as long as g as the ave verage matu turity ty o

• f th

f the S Sta tate te’s long-term b bonds ( s (ab about 6 6 ye year ars).

23

SLIDE 24

Set

et a mini nimum p projec

• ject s

t size ( e ($50,000?) ex excep ept f t for

• r criti

tical hea health th and safety ety need needs and nd avoi

• id risk of
• f smallest p

projec

• jects

ts b bei eing ng vetoed etoed.

Av

Avoi

• id fund

unding p projec

• jects

ts th that t will b be e private tely op

• per

erated ted – do

• so
• onl
• nly

to to meet eet critical hea health th a and nd safety ety need needs of

• f you
• ur community.

Str

tres ess the the ex expec ecta tati tions f for

• r ti

timel ely ex expend enditure to to proje

• ject r

rec ecipien ents and a accep ept no t no ex excus uses

• es. As

Ask w wha hat el t else need e needs to to ha happen b en bef efor

• re

e a proj

• jec

ect c t can n proc

• ceed

eed b bef efor

• re i

e inc ncluding i it t in n the the capita tal b bill.

Limit the

the num number er of

• f projec
• jects

ts a any ny loc

• cal enti

entity c can n ha have e outs

• utsta

tanding at t one

• ne ti

time e to to enc encou

• urage p

projec

• ject c

t com

• mpletion.

Req

equi uire l loc

• cal p

projec

• ject m

matc tchi hing f fund unds w with ex th excep epti tions f for

• r ver

ery s small enti entities a and nd criti tical hea health th a and nd safety ety p projec

• jects.

24

SLIDE 25

 Request th

t that t th the LC LCS S work w with DF DFA t A to sh shar are p project d dat ata a using 2 g 21st c century y database ase technol

• log
• gy
• Currently, ICIP in the fall and SBOF Questionnaires in the spring are

entered through a web-based portal.

• LCS could adopt a similar web-based portal to accept capital outlay

requests.

• Would allow common, non-confidential data fields to be transferred

from one system to another for locals to simply update or verify.

• Would allow legislators to receive informative reports of all requests in

their district.

• Would flag antidonation problems and projects that aren’t shovel

ready before appropriation so funds can be better targeted to projects that are ready to succeed.

25

SLIDE 26

 SHARE d

dat ata w a was as reviewed t to determine w which 2 2013 an and 2 2014 pro rojects h had n no No Notices o

• f Oblig

ligation (N (NOOs/encumbra rances). ).

 All projects s

swept i in n SB8 w were 2 2 to 3 years o

• ld w

with $ $0 o

• f the

he funds e encumbered in in third ird-par arty c contrac acts. s.

 Each

ch o

• f

f th these p projects ts c certi tified i in writi ting th that th t they w wou

• uld

encumber 5 5% of fund unds w within 6 6 months o

• f bond i

issua uance a and nd expend 8 85% w within 3 3 ye year ars s of bond i issu ssuance.

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SLIDE 27

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SLIDE 28

Steven Kopelman Executive Director New Mexico Association of Counties (505) 820-8117 skopelman@nmcounties.org Bill Fulginiti Executive Director New Mexico Municipal League (505) 982-5573 WFulginiti@nmml.org Stephanie Schardin Clarke Deputy Cabinet Secretary Department of Finance and Administration 505-827-3930 Stephanie.Schardin@state.nm.us

28

Rick Lopez Director Local Government Division, DFA (505) 827-8053 Rick.Lopez3@state.nm.us Linda M. Kehoe Principal Analyst Legislative Finance Committee (505) 986-4550 linda.kehoe@nmlegis.gov