Jul. 13—A handful of vital public projects could be in jeopardy of losing funding over the next few years if the city of Santa Fe fails to submit its annual audits on time — a problem that has bedeviled the city in recent years.
Under Executive Order 2013-006, approved during former Gov. Susana Martinez's administration, the state Department of Finance and Administration has the ability to deny the release of any state appropriation if a municipality fails to submit a state-mandated audit on time.
Santa Fe has missed three consecutive audit deadlines, including its audit for fiscal year 2021.
At a City Council meeting last week, Councilor Michael Garcia requested a list of projects that could potentially be affected if state funding were withheld. He noted while money has not been blocked, the potential places the city in a difficult position.
"At the end of the day, the state has the legal authority to withhold the funds, and that is where my concerns lie," he said. "I feel positive that there is constant communication and collaboration between the appropriate stakeholders, but that doesn't mean the state's authority to withhold resources goes away. The state still has that authority."
City interim Assistant Finance Director Ricky Bejarano emphasized no funding has been denied and said he was fairly confident the 2021 fiscal year audit will soon be submitted, followed by the fiscal year 2022 audit by its Dec. 15 deadline.
"We recognize that it is critical," Bejarano said. "I am certainly not making light of it; it is an urgent situation that we are giving a lot of urgency to."
The city's audit problems reached a fever pitch in late April after State Auditor Brian Colón announced CliftonLarsenAllen, the firm that was contracted to help with the state-mandated audit, removed itself as the city's audit firm.
Colón had previously expressed concerns through a series of letters to the city about the potential for state and federal funding to be jeopardized if the audit situation wasn't resolved. Colón in the spring announced his intention to intervene in the city's audit situation, setting up a series of meetings between his office, the city and the state Department of Finance and Administration.
Bejarano said those meetings have been productive, leading to the possibility of CliftonLarsenAllen returning as the city's audit firm if the city can complete a series of tasks.
"Any resource that we can put toward it, we are putting toward getting this done," he said. "We are confident that we will get there."
Bejarano said bonds for about 10 projects, including funds to upgrade city parks, the Southside Teen and Resource Center and some key roadway improvement projects have been sold but no agreements between the state and the city have been struck on those funds because of the executive order.
Bonds for another 12 projects, including the construction of Phase 2 of SWAN Park, Santa Fe Fire Department fleet upgrades and midtown infrastructure improvements, have yet to be sold.
Even if they were sold, access to those funds could be delayed until the audit is submitted, according to an email from city spokesman Dave Herndon.
City Councilor Signe Lindell said she feels the city has been "heading in the right direction" and "making good progress" on fixing its audit process. She said there are still changes to everyday policies and procedures that need to be worked out.
She said she didn't believe state officials would want to penalize the city and place roadblocks in front of much-needed projects, including funding for senior citizens and youth.
"Those funds were appropriated because people want to see those projects completed," she said. "Everyone is pulling in the same direction. No one wants to be punitive about it; we are getting it done."
Department of Finance and Administration Cabinet Secretary Debbie Romero could not be reached for comment.
City Council Finance Committee Chairwoman Carol Romero-Wirth said progress had been made, adding she was "cautiously optimistic that we are moving in the right direction."
She said part of the reason the city is "working so hard" to correct the issue, is the knowledge some of the funding could be withheld.
"We are grateful to the money we are getting from the Legislature and don't want to do anything to jeopardize that," she said.
"I think we have our issues, but I think our financial footing is sound," she added. "I think if they thought it was anything but sound, that would be an excuse to withhold funding."
City Councilor Chris Rivera said the city is going to have to take steps to ensure audits are taken care of in a timely manner while also making sure future funding is secure.
He said ever since he learned the 2021 fiscal year audit was going to be submitted late, he's been "skeptical" of the entire process.
"I would love to think we would have it in on time and everything would be good," he said. "But the proof is in the pudding."