Lawmakers oppose dismantling Finance Authority
SANTA FE, N.M. (AP) — Lawmakers proposing to strengthen oversight of the troubled New Mexico Finance Authority say they'll oppose any attempt in the Legislature to dismantle the agency because of a fake audit scandal.
The authority operates independently from any state agency and functions like a bank for governmental infrastructure. It receives a share of state tax revenue to issue bonds and provide low-cost loans to cities, counties, school districts and others for projects ranging from buildings and drinking water systems to equipment such as fire trucks.
"We can't let bad management ruin a wonderful program," Sen. Tim Keller, an Albuquerque Democrat, said in an interview. "NMFA, as an entity, is our state construction and development bank. It's been incredibly successful in that function."
Created by the Legislature in 1992, the authority has come under close scrutiny because its financial statements were falsified earlier this year and the fraudulent information was distributed to potential bond investors.
Investigators are trying to determine whether money is missing, but securities regulators have charged the authority's chief operating officer and its former controller with fraud.
Keller and Rep. Luciano "Lucky" Varela, D-Santa Fe, said the audit scandal points to the need for better oversight of the authority and they're recommending proposals for the Legislature to consider in January.
Keller suggests revamping an 11-member board, which hires the authority's CEO and approves project financing. All but two of the board members are appointed by the governor or run administration agencies. Keller said the board should be more diverse, with fewer cabinet secretaries and more outside members such as the state treasurer. He also proposes requiring half of board appointees to have 10 years of banking or finance experience.
Varela wants the Legislature to have more supervision over the authority's operating budget and contracting. Unlike a state agency, the authority doesn't have to come to the Legislature to get an allocation of money for its annual operations. Authority employees are not state workers.
Both lawmakers, however, oppose a proposal by one of Republican Gov. Susana Martinez's top budget aides to end the tax revenue earmark for the authority — about $26 million a year.
Varela described it as a "radical change" that could privatize much of the authority's financing work. Keller calls it "a job killing idea."
"I think that's very dangerous right now because the need for infrastructure is even greater and the associated jobs that are created also are needed," Keller said.
The authority's supporters say the guaranteed revenue flow is critical to the agency's credit rating, allowing local governments to obtain loans at lower costs than many could obtain in the private financial markets.
The proposal was among several suggested by a Department of Finance and Administration official to the governor's chief of staff. Others call for developing a plan "to get the NMFA back to its core mission of assisting with projects for smaller, rural areas in the state."
Martinez spokesman Scott Darnell said the governor's legislative agenda hasn't been decided but Martinez wants to improve the authority's accountability, which could include subjecting NMFA to financial and personnel requirements that apply to state agencies.
Darnell said the administration hasn't reviewed details of Keller's proposals, but "given the current scope of NMFA activities, simply altering the makeup of the board may not be sufficient in improving financial processes, regular oversight and management."
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