For a brighter future, time to fix financial reporting

New Mexico’s way of life and cultural preservation depends on the small local public bodies like acequias, land grants, mutual domestic water consumer associations, and soil and water conservation districts that manage vital local resources.

New Mexico has hundreds of these small public bodies registered with the State Auditor’s Office. Most of these entities receive capital outlay money to support their mission, but Executive Order 2013-006 restricts these entities from receiving those funds if they aren’t up to date on their financial reporting.

Unfortunately, roughly two-thirds of these registered local public bodies aren’t in compliance with annual financial reporting requirements mandated by state law. In fact, almost $6 million in capital outlay funding is being withheld from these local public bodies due to a lack of financial compliance. And to be clear, there are literally billions of dollars in unspent capital outlay funds sitting in state government coffers right now.

These small public bodies are leaving money on the table: money the local acequia mayordomo could use to buy a new compuerta, or gate, to keep the water flowing or that the local mutual domestic could use to replace aging pipes in faltering infrastructure to deliver drinking water. Without completing their annual financial reviews to keep them current, they can’t obtain future capital outlay funding and nonemergency federal funding.

These entities are typically managed by volunteers working extra hours to help their fellow citizens. They normally don’t have the resources necessary to maintain their financial compliance. However, all must have various, tiered levels of financial examination depending on their revenue levels.

So, my office has historically provided application-based financial assistance grants to these small local entities every year to try to get them into compliance. Earlier this year, when I was signing off on a $2,000 grant for a small public body’s financial certification — from 2013 — I realized this elective grantbased approach isn’t working. We need a more comprehensive, centralized and phased approach with the express goal of assisting all local public bodies to get into financial compliance while providing a procurement opportunity to independent public accounting firms that incentivizes the firms to travel to remote parts of the state to assist these small public bodies.

Rather than continuing to dole out meager grants that barely make a dent in the problem, I am requesting a special appropriation that will allow us to begin procuring independent public accountants to work with all the local public bodies in a given region to bring them into financial compliance. I have requested an initial appropriation of $1 million from the Legislature to get this process started. My staff estimates it will require about $4 million to complete over 2,000 annual financial certifications to get all these local public bodies financially compliant.

This will allow my office to start the process of clearing up many years of missed financial reports and getting these local public bodies eligible for the capital outlay funds that could make the difference between water or no water for some of our neighbors. My gratitude goes out to the legislators supporting this effort to make state government work better to truly begin building a brighter future for New Mexico.