The burn scar of the Hermits Peak-Calf Canyon fire pictured Thursday, June 9, 2022. (Photo by Patrick Lohmann / Source New Mexico)
The federal claims office tasked with compensating victims of the state’s biggest-ever wildfire expects to spend about $377 million in administrative costs by the end of this fiscal year, according to documents a lawyer for victims obtained through a Freedom of Information Act request.
In three spending bills since late 2022, Congress gave the Federal Emergency Management Agency a total of $5.45 billion with the aim of fully compensating victims of the Hermits Peak-Calf Canyon Fire. That fire erupted in April 2022 as the result of two botched prescribed burns in Northern New Mexico that escaped containment lines and merged into a 534-square-mile blaze that destroyed hundreds of homes and upended life in the small communities in the burn scar.
According to financial documents lawyer Antonia Roybal-Mack provided to Source New Mexico, the Hermits Peak-Calf Canyon Fire Claims Office expects to pay approximately $2.5 billion in compensation by the time this fiscal year ends Sept. 30. It’s paid out nearly $2 billion so far.
On top of the money going to victims, the office expects to spend about $161 million in administrative costs this fiscal year, which would put the total overhead costs at $377.5 million since the office opened in 2022. That amount, according to the documents, includes $13.5 million in transportation and travel, nearly $70 million in salaries and benefits, and nearly $2 million in equipment.
But the biggest line item by far —more than $290 million of the $377 million spent — was categorized as a “miscellaneous” expense, according to the documents.
That category functions as a catch-all for significant costs, including third-party contracts, purchases of goods and services, facility maintenance, medical costs “and other services not otherwise classified,” a claims office spokesperson said in an email Tuesday to Source New Mexico.
Money spent on administration comes from the same $5.45-billion fund Congress awarded for fire victims.
Including the overhead costs, the office expects to spend about $2.9 billion by October. That will leave an additional $2.55 billion for remaining claimants, minus future administrative costs.
Office spokesperson Deborah Martinez, in an emailed statement justified the administrative costs as necessary to provide fair and efficient compensation. The office has to confirm eligibility for each claim and determine fair compensation, develop policies, build case management systems and more. As a result, the costs add up, she said.
“Administering a federal compensation program for wildfire-related losses is complex and resource-intensive due to several factors,” she said. “Developing program policies and procedures demands significant time, research, and legal review and occasional updates. …These steps and many more are crucial to delivering payments fairly, equitably, and efficiently.
According to the latest figures, the office has paid $1.97 billion to fire victims as of March 11. That includes $1.53 billion to individuals and households; $257 million to businesses; and$104 million for local government agencies.
Roybal-Mack, in an interview with Source New Mexico, said even though the money spent to run the compensation fund is “a huge number,” she noted that the office has been under mounting pressure, including from victims and members of New Mexico’s congressional delegation, to staff up and pay claimants as fast as possible.
“It’s substantial,” she said of the overhead costs. “But it’s also a big program, and we’re asking them to run a big program and run it quickly.”
Roybal-Mack said this new look at the finances made her realize the necessity of the additional $1.5 billion Congress awarded late last year. The office has not yet paid out several large pots of money, she said, including an expected $445 million to the State of New Mexico, plus hundreds of millions of dollars for people who lost their homes in the fire, along with untold amounts for erosion damage.
A federal judge in December also ordered the office to pay claimants for so-called “noneconomic damages,” which are similar to pain and suffering damages and estimated to be several hundred million dollars.
The government completed the spending reports Roybal-Mack received late last year; they also include spending projections and monthly breakdowns of spending so far.
One notable chart shows a surge of claims beginning in March of last year, which the Claims Office officials annotated with the phrase “Mount Smoke.” That’s a reference, Martinez said, to a glut of claims for smoke and ash damage.
People living within a 2,200-square-mile area are eligible for smoke and ash payments from the towering smoke plume that lingered for weeks in the area as the fire burned, according to a Source New Mexico analysis of an eligibility map the outlet obtained. The office said in September that it’s paid out nearly $400 million for cleaning costs associated with smoke and ash, using a standardized formula that officials said enable fast payments.
The amount of money spent on smoke and ash has frustrated some advocates and members of Congress, especially as some people who lost their homes are still awaiting payment. Those total-loss claims are complicated and time-consuming, but the office is making them a priority, claims office director Jay Mitchell said at a meeting last month.
According to the documents Roybal-Mack obtained, the office averaged $140 million a month in the last six months of 2024, excluding a one-time payment of $98 million in September 2024. In late August, the office announced it had awarded $98 million to the city of Las Vegasto replace its water treatment facilities, which were damaged during post-fire flooding.
If the office continues to pay $140 million a month like it did in the second half of last year, it will spend $4 billion by January 2026, according to the documents.