Capital outlay funding will require annual audits

SANTA FE — New Mexico cities, counties and other government entities must complete annual financial audits to receive state capital outlay funding under an executive order signed Thursday by Gov. Susana Martinez.

The Republican governor said the order will compel cities and counties to have up-to-date audits on file and could serve to reduce waste and abuse in state public works spending.

“Millions of dollars are spent each year on capital projects in communities throughout our state,” Martinez said. “It’s important for the entities spending this money to show on a regular basis that they meet financial management standards.”

Under state law, the financial affairs of state and local governments must be examined each year by outside auditors.

A total of 59 cities, counties and other governmental entities were not up to speed with the requirement as of April 15, according to state Auditor Hector Balderas’ office.

The delinquent audit list included the cities of Sunland Park, Española, Carlsbad, Santa Rosa, Gallup and Texico. It also includes

Otero, Eddy and De Baca counties, as well as the New Mexico Finance Authority and the state Indian Affairs Department.

In some cases, the statemandated audits have not been received by the State Auditor’s Office for several years.

Balderas said that Martinez’s executive order will put more teeth into the state’s enforcement of audits.

“I believe it’s an important step in improving accountability of agencies that are placing public dollars at risk,” Balderas told the Journal in a phone interview. “It no longer allows the state to reward poor-performing agencies with additional dollars.”

However, Balderas said he still hopes legislators will enact stiffer penalties for having a delinquent audit and provide more support to government entities who are behind schedule.

In addition to requiring an up-to-date audit in order to receive capital outlay funding, Martinez’s executive order requires more oversight of such spending when a government entity’s most recent audit raised concerns.

The governor earlier this year signed into law a $270 million package of statewide public works projects, though she used her line-item veto authority to ax about $4.4 million worth of projects that had been approved by the Legislature.

The executive order could impact 61 projects in this year’s public works package that are spread over 32 dif ferent government entities, according to the Department of Finance and Administration.

Bonds to pay for the project approved in this year’s capital outlay bill are expected to be sold in June by the state Board of Finance.