Water Trust Board and Finance Authority urge more funds as communities face water-system risks

Officials from the Water Trust Board and the New Mexico Finance Authority told the Senate Finance Committee that state funding must grow to meet a backlog of water and wastewater projects and to protect communities threatened by drought, wildfire and aging infrastructure.

AJ Forde, vice chair of the Water Trust Board and speaking in his capacity with the Municipal League, said local governments face mounting infrastructure needs and that the board's process helps municipalities and small systems access funding they otherwise could not afford. "If we don't have water, we don't have economic development. We don't have housing," Forde told the committee.

Marquita (presenter identified in hearing as the finance authority chief executive) described the Water Trust Board process, funding sources and recent project volumes. She said the Water Project Fund is primarily supported by severance tax bonds (8.1 percent net of senior bonds) and the constitutionally protected Water Trust Fund is managed by the State Investment Council; both support grant and loan awards. The authority has shifted to larger awards in recent years: the largest award last cycle was $20 million to Farmington and Portales requested roughly $60 million for long-term needs.

Why it matters: Witnesses and senators described communities already relying on hauled water, diminished wellfields and wildfire-damaged systems operating at reduced capacity. AJ Forde said Portales had submitted a $60 million request to keep the community viable in the coming decade; other speakers noted systems with lead brazing or other health-and-safety vulnerabilities.

Program mechanics and scale: Marquita said most awards historically have been grants (about 85 percent) and that the finance authority typically funds planning, design and construction in phases; applicants must reapply for later phases. The board accepts applications after a notice-of-intent step beginning each July; the evaluation prioritizes health, safety and welfare and awards are vetted for regulatory compliance before funds are authorized by the Legislature. The authority reported nearly $847 million awarded since 2002 and expects roughly $160 million in awards this year; current documented need in submitted applications exceeds available funds by about $100 million.

What legislators asked: Senators pressed officials on whether small systems are disadvantaged by the application and phasing process and on how to reduce administrative burden. Officials said the authority plans to use program dollars to help very small systems prepare engineering planning documents so they can apply and, when feasible, fund stand-alone phases to avoid stranded, partially built projects.

Funding and policy options discussed: Committee members proposed creating a statutory mechanism or carve-out for emergency or crisis funds to respond to wildfire- or flood-related system failures; witnesses said the authority could manage a limited emergency carve-out administratively but that statutory changes might be needed for standing emergency funding. Committee members also discussed statutory timing of application cycles and whether that process should be changed to reduce reapplication burdens.

Ending note: Committee members noted a separate capital package under consideration and discussed whether additional one-time funds should be directed to the Water Trust Board to clear a backlog of authorized but unfunded projects. Officials said they would continue to work with the Legislature on priorities and to target assistance for very small and regional systems to improve resilience.