SANTA FE, N.M. (AP) — Gov. Susana Martinez’s administration is tightening controls over capital improvement financing by requiring local governments, school districts and o[auth] thers in New Mexico to have a current audit before state money is released for a project.
Martinez issued an executive order Thursday that directed the Department of Finance and Administration to implement requirements ensuring capital project financing goes only to governmental organizations that have completed their annual audits and corrected any problems identified by auditors.
“Taking this step establishes a reasonable expectation of basic financial control and should improve the likelihood that capital projects are completed in a responsible and efficient manner,” the Republican governor said in a statement.
About $269 million worth of capital projects were approved by the Legislature and signed into law by the governor this year.
Martinez said her administration developed the new guidelines after reviewing this year’s projects and determining that some were for governmental groups late in submitting financial audits.
A spokesman for the governor said it hasn’t been determined yet if any capital project money will be withheld this year because of audit problems.
State law requires audits for governmental agencies ranging from departments under the governor’s control to cities, counties, schools, colleges and special entities such as flood control and sanitation districts.
State Auditor Hector Balderas, a Democrat, welcomed the governor’s action and said he has repeatedly asked the Legislature to give him the power to penalize or fine governmental organizations that don’t comply with audit requirements.
“The executive is now taking away an incentive from a poor-performing government until they comply with the Audit Act,” Balderas said in an interview.
He said governmental entities without an up-to-date audit are at risk for waste, fraud and abuse, and his office publishes a list of those that haven’t complied with audit requirements. That currently includes 32 municipalities, three counties, six school districts and five state agencies.
New Mexico finances most capital improvements with the proceeds of 10-year bonds backed by revenue from taxes on oil and natural gas production.
Since taking office in 2011, Martinez has complained that legislators don’t focus enough on regional and statewide priorities and instead take a “grab bag” approach by earmarking money for hundreds of projects in their local districts with little vetting.
“These funds are important to our communities, and today’s order should help mitigate some of the abuse and waste that has historically been cited as a weakness in the capital outlay process in New Mexico,” Martinez said.