Out of the Park

The State of New Mexico will not be managing capital outlay funds designated for City of Santa Fe parks after all.

On Sept. 29, Santa Fe City Manager John Blair said via news release that the state Department of Finance Administration had redirected $1 million in 2021 capital outlay funds designated for City of Santa Fe parks to the state General Services Department to oversee.

That announcement followed an Aug. 23 letter to Mayor Alan Webber from DFA that cited a 2013 executive order signed by former Gov. Susana Martinez, which states recipients of capital outlay appropriations require “timely audits,” amongst other fiscal requirements. The letter suggested the city would need a fiscal agent to access its state funds.

“We are working to understand the legal authority for, and the implications of, such an action,” Blair said in a statement last Friday regarding the $1 million parks appropriation.

That authority, DFA reiterated to SFR, came from the executive order.

But SFR has since learned former Attorney General Gary King, in response to questions from lawmakers about the legality of that order, issued an opinion on Nov. 22, 2013 that “the governor is not permitted under current law and the separation of powers mandated by the New Mexico Constitution to unilaterally withhold capital outlay funds properly appropriated by the Legislature.”

Senate Majority Floor Leader Peter Wirth, D-Santa Fe, tells SFR he was very concerned when he learned the state had reassigned the city’s parks funds to GSD for oversight.

“I think it sets a very dangerous precedent,” he says. “I have not seen this done like this so it did cause me some real concern.”

Thus, on Oct. 3, Wirth and House Majority Whip Reena Szczepanski met with Gov. Michelle Lujan Grisham (virtually because she’s recovering from COVID-19) and had what Wirth described as a “very constructive” discussion about the new direction.

The governor’s press secretary, Caroline Sweeney, also described the call between the governor, Wirth and Szczepanski as “productive” and writes “it was determined that the state will not ultimately administer this capital appropriation. While this project was not specifically appropriated to the City of Santa Fe, we defer to the Legislature’s intent for the administration of this funding.”

(The capital outlay funding from 2021 for Santa Fe Parks had six sponsors, including the governor, whose sponsorship was for the largest amount: $350,000).

Moreover, Sweeney writes: “We recognize the City of Santa Fe is making progress toward completing their audits and look forward to seeing them get fully caught up by December. New Mexicans deserve to see capital outlay projects completed in an expeditious and fiscally responsible manner, and we stand ready to assist the City of Santa Fe in completing this and other projects that enhance the quality of life for Santa Fe residents.”

However, she notes, “this is another illustration of the need to redesign how the state and local governments collaborate on capital projects. As elected officials, we must commit to getting things done quickly for the benefit of the citizens of New Mexico.”

According to DFA, in response to questions from SFR, the City of Santa Fe is the only local entity in the state in this now-revised “predicament.” Spokesman Henry Valdez tells SFR via email “this was an extremely rare occurrence where a project was over two years old, bonded and ready for implementation with an approaching expiration date (6/30/25).”

While city officials and members of the state delegation balked at the plan to move oversight of the funds based on the 2013 executive order, State Auditor Joseph Maestas tells SFR he supports the intent of the order. “I think it’s one of the best good government pieces of policy,” he said. “The only shortcoming is it’s not law.”

Maestas hopes to see the policy modified and codified into law. Its main problem, he says, is the “workaround” that allows governments and other entities to work with a fiscal agent in order to access their capital outlay funds. Last March, Maestas raised concerns about the possible hit to Santa Fe’s bond rating and other ramifications of the late audit.

The city’s 2021, 2020, 2019 and 2018 audits all were late.

“So, it’s a workaround that doesn’t address the root cause of a lack of financial accountability,” he says. “That policy is good government, but it needs to become state law and incentivize public entities to not just become financially compliant, but to maintain that compliance.”

Wirth tells SFR ”the important thing now is there’s a desire to move forward, collaboratively, working with the city, working with delegation, working with the governor. We were able to explain to the governor…about the work that the city has done and the progress that’s been made on these audits. And the reality is, they’re close. So if the 2022 audit is done…in the next couple of months, that’s the only outstanding audit as of right now. So best case scenario is get those audits done. But in the meantime, let’s all be planning together on how to get this money out and quickly once it’s released.”

SFR was unable to reach either Blair or Webber by press time for comment. At last week’s City Council meeting, Finance Director Emily Oster said the city’s late audit for Fiscal Year 2022 should be completed by contractors no later than Dec. 4, but could not commit as to whether the city would meet the Dec. 15 deadline for its Fiscal Year 2023 audit. Oster has delivered, she says, 36 audit updates for the governing body as the city works to catch up. Officials have cited staff vacancies and the COVID-19 pandemic as factors in the late audits.

The City Council at that meeting approved a contract Wednesday with accounting firm Carr, Riggs & Ingram to compile the city’s ‘23 audit for $269,454.

“The city is really all on the same page that these audits need to get done as soon as possible,” Oster said last week. “This is a team effort and an all-hands-on-deck type of situation,” Oster said. “We are on the right track.”