FARMINGTON — San Juan County officials and the president of an organization that oversees an aging lagoon in Kirtland have taken issue with one of Gov. Susana Martinez's line item vetoes in bills passed during the 2014 New Mexico legislative session.

The veto, in House Bill 55, prevents capital outlay funds from being used to repay an outstanding loan taken out to fund the closure of Kirtland Lagoon, a domestic sewage pit at least half a century old that twice in the past four winters nearly overflowed into the San Juan River.

The Lower Valley Mutual Domestic Wastewater Association, formerly Lagoon Limited, owns and operates the lagoon. But the organization plans to transfer its responsibility to the Lower Valley Water and Sanitation District once the project is complete.

But County Operation Officer Mike Stark and Tom Schilz, the president of the association that manages the lagoon, are concerned outstanding loan payments could discourage the other organization from taking ownership of the lagoon.

As of early April, $74,522 of the loan remains to be paid, Stark said.

"The line item veto throws a wrench into the project," he said, "but it's nothing that we can't overcome."

Martinez's veto won't prevent the lagoon's closure, he said.

The decommissioning project includes building a lift station to pump the site's waste to Station No. 3 in Farmington's Wastewater Treatment Plant and installing pipes to connect the lift station to the series of other stations pumping to Farmington's plant.

The $3.7 million project is fully funded. The Legislature in its recent session allocated $996,000 in capital outlay funds, adding to last year's $2 million from the same source. In 2012, the organization that operates the lagoon received a $90,000 loan and $86,000 grant from the New Mexico Environment Department Construction Programs Bureau to engineer and design the project.

Stark is frustrated with Martinez's veto, he said, because he and other county officials worked at length with New Mexico Environment Department officials and local legislators to craft the wording for the lagoon's legislation.

The governor's veto strikes out a specific clause from a paragraph on page 73 that previously dedicating funding to plan, design, construct improvements and repay a loan for the project. The omitted words are "and to repay a wastewater facility construction loan fund project for improvements."

"The question we have — and maybe she does have the authority — can (Martinez) line item (veto) specific pieces of that legislation," Stark said.

But Martinez's press secretary, Mike Lonergan, said in a written statement that severance tax bonds — where the funding for the lagoon project originates — are to be used for construction.

"They aren't allowed to be used for operations and recurring expenditures, and we do not believe it's proper to use them to repay loans, either," he wrote.

He also cited the New Mexico Constitution, which states "the governor may in like manner approve or disapprove any part or parts, item or items, of any bill appropriating money."

He added that other loan repayments in the house bill addressing capital outlay fund spending were also vetoed, and Martinez "wholeheartedly" supports the project to decommission the lagoon.

Meanwhile, Schilz, the president of the association that currently owns the lagoon, said he isn't certain how the organization will repay the loan. One method, he said, could be distributing the costs to their customers.

"We're going to have to figure something out," he said. "I'm not sure. We're not going to give up on it yet."

Dan Schwartz covers government for The Daily Times. He can be reached at 505-564-4606 and dschwartz@daily-times.com. Follow him @dtdschwartz on Twitter.