The City of Truth or Consequences had two findings on last fiscal year’s audit, one of which wasn’t the city’s fault.
That finding was for turning in a late audit. The city’s deadline was Dec. 15, 2023, but it didn’t turn it in until March 6. The city had to wait for the Housing Authority, which was late, making the city late. (The audit covers the city’s fiscal year starting July 1, 2022 and ending June 30, 2023.)
The city’s audit includes the Housing Authority as a “component unit,” a financial tie created years ago when T or C decided it wanted a representative on the Housing Authority’s board, according to Chris Garner of Patillo, Brown & Hill, located in Albuquerque, who has been the city’s auditor for the last five years.
Garner presented the audit at the May 22 city commission meeting.
City Manager Angela Gonzales said she is in discussion with the Housing Authority “about an amicable divorce.” Garner concurred that the “risk is not worth having a board member.”
The risk Garner referred to is losing state and federal funding, since governmental agencies, as well as private financial institutions, examine a city’s audit before making grant and loan awards.
Mayor Rolf Hechler said the city “couldn’t talk about it [the audit] until it became public, but we were worried about it [being late] because it could have affected our funding.”
The city asked the legislature for $20 million and $16 million for critical waterline repairs in two separate bills last legislative session, both of which required a timely-submitted audit. The city received $4.4 million and $16 million shortly after the city’s audit was submitted.
Hechler said he realized how important timely audits are when looking over Colonias Infrastructure Fund awards, a federal funding source overseen by the state. Seven entities still had not submitted their audits when the CIF board met about a month ago, and received nothing. The city will receive $4.4 million for waterline repairs and $305,400 toward design and replacement of the wastewater treatment plant’s bar screen, which will probably cost $1.25 million, Hechler said.
The city’s other audit finding was for issuing a $394 purchase order after the purchase was made. A purchase order gives authority and permission for a purchase. To issue one after the fact is erasing a financial control over spending. Garner found one problem among the 25 purchase orders he reviewed in this particular financial-control test.
The city’s audit is available on the state auditor’s website: https://osaconnect.osa.nm.gov/auditReportSearchDetail.aspx?id=DF9F2A0D-6223-48C7-8A8F-F6F0BBFF055E&type=
Some highlights from the audit:
– Assets minus liabilities, the city’s net worth is about $45 million.
– As with all the city’s audits, the city’s operations (which do not include capital projects) are divided into “governmental activities” and “business-like activities.” Governmental activities are what the people agree to pay taxes for, and include general government, public safety, public works, culture & recreation, health & welfare and interest on long-term debt. Business-like activities are expected to support themselves through fees and include the joint utility office, electric, water, wastewater, solid waste, impact fees, airport, cemetery and golf course.
The governmental activities expended $9.1 million and business-like activities expended $12.2 million or $21.3 million in all. I’ve seen the city spend much more in previous years ($27 million and more) and costs have gone up since the pandemic, making this very conservative spending.
– Our utility bills are going up precipitously. Are they covering operations costs and the yearly debt on capital projects? Wastewater fees have gone up 5 percent a year since 2017, yet expenses are exceeding revenues.
Electric: expended $6 million, charged for service $6.6 million, leaving $600,000 net.
Water: expended $1.1 million, charged for service $1.5 million, leaving $400,000 net.
Wastewater: expended $1.4 million, charged for service $1.1 million, leaving -$300,000 net
Solid Waste: expended $2.1 million, charged for service $2.4 million, leaving $300,000 net.
– The general fund was not in the negative, maybe for the first time ever! Usually the general fund spends $2 million more than the revenue it takes in. City management kept expenses down to $6.1 million and $6.6 million in revenue was collected, over $5 million of which was gross receipts taxes. The general fund was net $600,000!