City must take care of finances

Poor city of Santa Fe. If it isn’t one financial upset, it’s another. Whether embezzlement scandals in the parking division, questionable handling of parks bonds dollars, cash spending issues at the Genoveva Chavez Community Center, skimming thousands from cash paid to the Utility Billing Division, and now, concern over the city’s overall ability to track how money is being spent, the city’s financial dealings have raised eyebrows for years.

Now, an external review has stated plainly that the city is at high risk of both fraud and abuse — in other words, Santa Fe is making it easy to fritter away taxpayer dollars. Two city employees are on leave, and an investigation into audit findings is ongoing. Even before that is completed, Mayor Javier Gonzales is moving ahead with possible reforms.

First up, getting rid of the internal audit department in favor of outside overseers. The city’s five-member Audit Committee would manage a contract for an independent auditor to do the work currently done by a city employee. That’s a recommendation from the recent audit findings. Bringing in an impartial overseer is sensible, especially if that reduces the number of city employees. Spending for a contract should mean a reduction in payroll at the city.

On Wednesday, Councilor Signe Lindell introduced the reforms (the mayor was ill), which will go to committee next month. While moving ahead with reform is necessary, the city needs to make sure it understands exactly what happened first.

Councilor Carmichael Dominguez is thinking of calling the Finance Committee together for a special meeting to discuss the review and plan the city’s next steps. He would bring together the entire council, and that’s the right approach. It will do no good to attempt reform without understanding what has gone wrong.

At this point, there is no evidence that any fraud has occurred, just that the city is ripe for plucking. Taxpayers do not know how the sloppy systems developed. They do not know why staffers weren’t completely trained in systems or why procedures are not standardized across the city.

Councilors — especially those who have served for years — have to ask themselves how they missed the warning signs, or whether past audits caught those signs. The mayor and council have to question top city staffers on what has been overlooked and why. They should examine previous audits, too. Finally, they should take a deep dive into the most recent audit, done by McHard Accounting Consulting, to absorb results and put systems in place to safeguard taxpayer dollars.

The bottom line is that, for whatever reason, the city of Santa Fe has a consistent problem dealing with its finances. That raises concerns, not just for today but for the future. For several years, a not-so-covert campaign has been conducted to have Santa Fe charter its own public bank.

The logic being — and it is seductive reasoning — that Santa Fe could save money through such a bank. Owned and operated by the city with public funds, such a bank might be able charge lower interest rates on loans and pay more on savings. A bank operated in the public interest, the reasoning goes, will be good for the city and the economy.

While we can’t argue with such reasoning, we can say this: Until and unless the city of Santa Fe can show that its fiscal house is in order, the notion of a public bank should remain just that — a notion, a dream with little chance of becoming reality. For too many years, and through different administrations and city staffers, the financial business of the city has faced issues. All of those must be sorted out before any grand initiatives are started. Citizens must be able to trust that their hard-earned dollars are being spent well and wisely.

Remember, a lack of trust in the city’s ability to operate programs is one reason voters did not approve a tax on sugary drinks; they liked early education, but they did not believe that city bureaucrats could put together an effective operation. We would wager that voters are just as skeptical about the city being able to run a bank.

After all, city leaders still are trying to figure out whether actual fraud occurred. They are trying to sort through an audit with 62 separate issues across city government. Finance Director Adam Johnson, on the job for several months, asked for the external audit because he identified “significant red flags.” He deserves credit for raising the alarm, and we are sure he will be part of improvements.

And that’s where the city’s focus needs to be — on fixing the issues raised by the audit. For now, that’s more than enough of a challenge.