NM withholds capital funding over audit issues

July 5, 2013 • State News

SANTA FE, N.M. (AP) — Gov. Susana Martinez’s administration is following through on its promise to tighten controls over capital improvement financing.

Martinez issued an executive order in May requiring local governments, school districts and others in New Mexico to have a current audit before state money is rele[auth] ased for a project.

Now, the state Department of Finance and Administration has suspended more than $13 million in funding for 122 capital projects around the state. That includes nearly $1 million for Eddy County and another $738,000 for the city of Albuquerque.

Agency spokesman Tim Korte told the Carlsbad Current-Argus ( ) that communities can still get the money that was appropriated by the Legislature for the local projects as long as they solve any problems with their audits by June 2015.

Those governments affected range from the state’s largest city to small villages.

Carlsbad City Manager Steve McCutcheon said the city was late on submitting its audit. He said recent changes to the state’s rules on audits and low staffing levels made it difficult to comply in a timely manner.

“We were not staffed property to take on that amount of work. We had normally been having the accountants do it, but the new rules say the accountant can’t prepare the books and audit them,” McCutcheon said. “It’s not only been a problem for Carlsbad, but it’s been a problem for cities and entities all over the state.”

Martinez sees completed audits as a critical financial standard.

“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 issued at the time she signed the executive order.

About $269 million worth of capital projects were approved by the Legislature and signed into law by the governor this year.

Martinez’s administration developed the new guidelines after reviewing this year’s projects and determining that some were for governmental groups late in submitting financial audits.

State Auditor Hector Balderas, a Democrat, had welcomed the governor’s action. He has said governmental entities without an up-to-date audit are at risk for waste, fraud and abuse.

Senate Majority Leader Michael Sanchez, D-Belen, criticized the administration on Wednesday. He said the way in which the state is carrying out the new requirements “will hurt many small rural local communities desperate for jobs and economic boosts that capital outlay projects bring.”

The projects range from construction of a health clinic in Cimarron and emergency generators for fire departments in Valencia County to new animal shelters in Carlsbad, Truth or Consequences and Los Lunas, Sanchez said.

New Mexico finances most capital improvements with the proceeds of 10-year bonds backed by revenue from taxes on oil and natural gas production.

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