Tardy Santa Fe audit sparks concerns about state capital funding

Santa Fe, New Mexico, city officials are fretting that a late fiscal 2021 financial audit could lead the state government to withhold state bond proceeds earmarked for city capital projects.

The audited financials for the fiscal year that ended June 30, 2021, are seven months past a Dec. 15, 2021, due date in the latest of a string of late financial filings by the city.

“There’s a sense of urgency to get it in,” Ricky Bejarano, Santa Fe’s interim assistant finance director, said on Thursday.  “It’s not good for the audit not to be in. It needs to be in and it needs to be timely.”

He said that under a 2013 executive order by then-Gov. Susana Martinez, the state can withhold capital outlay funds until an audit is submitted.

So far that has not happened, according to Bejarano, who added that the city of 84,000 is expecting about $4 million to $5 million in proceeds from state general obligation or severance tax bond issues to reimburse capital expenses for roads and other projects.

An official in the New Mexico Department of Finance & Administration did not immediately respond to a request for comment.

Bejarano, who joined the city in January, said the COVID-19 pandemic was a major factor in the audit’s delay, along with a paucity of accountants for hire in the state.

Santa Fe has issued a request for proposals for accounting firms to conduct fiscal 2021, 2022, and 2023 audits after a firm hired to conduct the current audit withdrew because “we weren’t prepared,” he said. Another RFP seeks accounting and audit preparation work for fiscal 2022.

The national median in 2021 for cities reporting their financial results was 180 days from fiscal year end, according to Richard Ciccarone, president of Merritt Research Services. He pointed out that Santa Fe’s fiscal 2020 and 2019 audits were also late, coming 448 days and 367 days respectively after those fiscal years ended.

While the city’s fiscal 2018 audit filing was timely at 170 days, the fiscal 2017 report took 267 days, he added.