Part 2 of NM’s audit crisis: No paperwork? Then you get no capital outlay goodies

By Rob Nikolewski on May 13, 2013
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Government entities be warned: Fail to submit an audit to the state and say good-bye to some of that state money you want.

In Part 1 of our investigation into agencies, school districts, communities and other entities that haven’t turned in proper audits of taxpayer dollars they’ve received or spent, focused on the alarming number that have skipped their annual audits.

Just this year, of more than 500 entities who are legally obligated to turn in their paperwork to the State Auditors Office, some 59 have not, including cities as large as Gallup and Española.

CARROT AND STICK: An executive order now requires all entities receiving capital outlay dollars from the Legislature to have their annual audits completed. Courtesy photo of New Mexico Capitol.

Now in Part 2, Watchdog looks into a new plan designed to get delinquent organizations get in line:

Earlier this month, Gov. issued an executive order mandating that if any governmental entity isn’t up to date on its audits, it won’t get any capital outlay goodies from the state, effective immediately.

“When you receive millions of dollars of taxpayer money, it’s the responsibility of the state to establish basic financial controls and require audits that demonstrate an entity’s ability to be a good steward of that money,” Gov. Martinez said in a statement.

“It’s a very important step that the governor ordered an executive order to say, ‘I’m no longer going to allow DFA (the ) to just openly reward with capital outlay entities that haven’t submitted their audit,” told New Mexico Watchdog.

Balderas may be a Democrat and Martinez may be a Republican but they’re both on the same page when it comes to getting entities to adhere to the to help make sure money isn’t getting wasted or stolen.

“I think it sends a message to people who are in charge of these operations that they need to take more responsibility or else they aren’t going to be rewarded,” Balderas said.

New Mexico Watchdog has obtained a list from the DFA, which has cross-referenced the capital outlay projects approved in this past legislative session with entities that haven’t turned in their required audits. The result?

Some 35 organizations that will not receive money the Legislature and the governor’s office initially OK’d for them until they get their finances straightened out.

Included on the list:

*$400,000 for Española ($300,000 to remodel city hall and the jail and $100,000 in improvements to the Veteran’s Memorial Wall)

*$300,000 for streets and drainage improvements in Sunland Park

*$220,000 for gas pipelines to the general hospital in Roosevelt County

*$200,000 in improvements to the water system in the town of Cuba

*$155,000 for activity buses for the Las Vegas, New Mexico, city public school district

*More than $145,000 to help seniors in Gallup

*$40,000 for an ambulance for the town of Santa Rosa

The State Auditor’s Office has been battling late audits for years with a staff of 30 and a budget of $3 million to enforce what Balderas calls “a culture of a lack of accountability.”

There may be 59 entities out of compliance now but Balderas says in recent years the number has been as high as 90, with an estimated $1 billion in money not properly accounted for.

Without timely audits, the possibility of embezzlement or financial mischief almost always follows.

Recent scandals in Sunland Park, the New Mexico Finance Authority and the each were accompanied by overdue audits.

“I’m like the truancy officer telling the parents about the bad grades and missed days,” Balderas said. “But the juvenile delinquent is still missing school and the fact that the kid is not in school probably indicates there are other problems that haven’t even been discovered yet.”

Now that the executive order has been issued, DFA — the agency that ultimately cuts the checks to entities receiving capital outlay — hopes the scofflaws will get back in compliance.

“This is going to give them more incentives to get those (audits) done,” said , the department’s Local Government Division Director, adding that overdue audits will be looked at carefully once they come in.

“Just because they’ve got their audit done, we want to make sure they’ve got good financial controls in place as well,” Gleason said. “Yes, we take this executive order very seriously … We have high hopes that this will help a number of communities to get into compliance.”

Balderas wanted to emphasize that many entities have leaders who are making an effort to get their financial houses in order but adds that “even when they’re not trying to play fast and loose and they’re just trying to do the right thing, I think they’re very at risk for some employee to steal them blind.”

In the meantime, here’s the list from DFA of capital outlay projects that are in jeopardy until the entities with missing audits get their paperwork completed:

(NOTE: Since the list was compiled, Roswell has turned in its audit and is expected to receive its capital outlay dollars.)


Contact Rob Nikolewski at and follow him on Twitter @robnikolewski

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One Comment For This Post So Far

  1. L,E. Liesner
    3:23 pm on May 13th, 2013

    This is the type of government you get when one party rules the state for about 80 years. Power breeds contempt, contempt breeds corruption and corruption destroys everything. I think it was Evert Dirksen that said, if you want a high school diploma in government corruption you go to Louisiana, if you want a college diploma in government corruption you go to Illinois, and if you want a PHD in government corruption you go to New Mexico, and this guy has been dead for years. Our state will not change until corruption is run out of office and that means an inform electorate voting for what good for the state instead of what’s good for the party.

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