He gave the response in reply to Mayor Pro-Tem Brendan Tolley’s concern over the City’s rising debt.
The Sierra County Sun followed up on Madrid’s claim the City is not and cannot be overextended given state and lender oversight.
The Sun focused on the City’s biggest lender, which is also a state governmental entity, the New Mexico Finance Authority, hitting both state and lender oversight in Madrid’s claim.
An Inspection-of-Public-Records-Act request asked the City for documents demonstrating the NMFA’s latest evaluation of the City’s debt.
The City referred the Sun to the New Mexico Office of the State Auditor’s website. The City would not narrow down its overly-broad response.
The Sun submitted the same IPRA to the Office of the State Auditor and was given a copy of the City’s 2018-2019 audit, which is 117 pages long. There is no debt evaluation in the document. Asked for page numbers, Bernadet Martinez, Office of the State Auditor’s management analyst and records custodian, gave the following explanation:
“The responsive document is the audited fiscal year 2019 financial statements for Truth or Consequences. The Audit Rule requires tests of compliance with Article IX of the state constitution limits on indebtedness (184.108.40.206(J)(15) NMAC). Any issues identified are required to be reported in the Schedule of Findings and Reponses (220.127.116.11(L)(1)(c) NMAC). The Schedule of Findings and Responses are listed on pages 96-102 of the report.”
Decoded, Article IX of the New Mexico Constitution and the administration codes cited state that debt is defined as “pledging the general faith and credit of the municipality.” In other words, debt is defined as general obligation bonds paid back from property taxes.
By this definition, the City has no debt.
The City only collects about $160,000 a year in property taxes and has issued no general obligation bonds that tap this income stream.
The pages Martinez referred the Sun to show no findings against the City for exceeding its debt limit, since there was no debt to audit, as the state defines debt.
State law limits general-obligation debt to 4 percent of the value of taxable property in the last assessment, unless the money is to be used to build water and sewer infrastructure, which has no property-tax limit.
The Sun interviewed the New Mexico Department of Finance Administration Local Government Division analyst Brenda Suazo-Giles to see if that state department examines the City’s debt beyond general-obligation-bond debt.
“We only look at general obligation bonds,” Suazo-Giles confirmed. “We have no investigative or prosecuting powers.”
City Manager Morris Madrid appears to also define the City’s debt as general-obligation-bond debt. This would explain his lack of concern over taking on about $12 million in principal-plus-interest debt this fiscal year, which ends July 1, most of it to be paid back from utility fees.
As a result, water rates will go up nearly 50 percent and sewer and solid waste fees 5 percent for the fourth year on July 1.
Madrid told the City Commission at the last meeting he will be “more aggressive” in pursuing utility-infrastructure-repair projects. The capital projects in the preliminary budget are estimated at $16 million for the upcoming fiscal year.