Lack of fiscal transparency still the rule for City of Truth or Consequences

by Kathleen Sloan | February 9, 2021
12 min read
Source: Freepix

Truth or Consequences City Manager Morris Madrid has yet to deliver on his promise given last summer that he would make the city more financially transparent. Madrid skipped giving a first-quarter financial report last fall and had staff present a second-quarter report at the last city commission meeting in January that confuses more than clarifies the city’s financial position, especially as it relates to the budget.

Madrid made his promise after three new city commissioners, who had all campaigned on the need for greater fiscal transparency, took their seats last April. Just after passing the final 2020-21 budget in July, the commission tellingly asked for more frequent financial reporting, particularly insisting on receiving quarterly reports.

Yet, despite the lip service given to fiscal transparency by the city commission and the city manager, T or C’s budgeting processes did not follow good government practices, and its hit-or-miss quarterly reporting that is supposed to allow the commissioners and city staff to closely track budgeted revenues and expenditures remains opaque.

To document how the T or C’s financial management and reporting falls short and thus makes it difficult for anyone to assess the city’s financial health, it is first necessary to set forth what constitutes good government practice. Our assessment draws from three sources of credible information about the norms other cities and counties follow in setting budgets and tracking financial performance. It relies, first, on this reporter’s experience covering five cities, three counties and one school district within three states over the last 15 years.

Second, the Sun researched the rules established by New Mexico Department of Finance to regulate the quarterly reports it requires municipalities and counties to submit. Finally, we interviewed Michael Steininger, the special director of the DFA’s Local Government Division, a troubleshooter who is sent around the state to help cities and counties get back on financial track.


Responsible local governing bodies devote five or six months to the careful preparation of an annual budget, starting in March to make a July 31 deadline. When budget time comes, local governing bodies can and should expect to receive next-year cost projections from each department head and an explanation for any increase or decrease in those costs.

Conscientious local governing bodies expect to be kept well informed about the city’s financial condition throughout the year so that they are prepared to take a leadership role in drafting a budget that takes into account both short-term priorities and long-term goals. They insist on receiving bimonthly or monthly reports, written and oral, from all department heads about their department’s work, needs and challenges.

When ongoing maintenance and replacement schedules and asset surveys reveal problems, department heads should report the issue discoveries to the governing body. The governing body often orders an engineering study to thoroughly investigate the problem.

Conscientious local governing bodies expect formal presentations of the study results. A public document paid for by the taxpayers, the engineering report allows the governing body and the public to prioritize the project’s ranking among competing needs and assess its budgetary and debt implications. Usually an engineering study will investigate alternative solutions and evaluate them for long-term cost savings.

Capital projects addressing big problems, such as 40-year neglect of water and sewer lines, are usually driven by long-term master plans that prevent public money from being spent unnecessarily or in a patchwork manner that will cost more in the long run.

Capital project costs, including debt, are always included in the budget.

Quarterly financial reports, presented in a standard accounting format that mirrors the budget and compares planned revenues and expenses to actual revenues and expenses, prepare the governing body and public for changes in services, taxes or utility fees. 


By contrast, the Truth or Consequences City Commission has not been regularly informed about the city’s financial condition during Manager Madrid’s two-year tenure (and, in fact, before). Commission meetings do not routinely include department-head reports, engineering reports or information about how contemplated capital projects fit into the city’s comprehensive plan or departmental master plans. Budget adjustments are approved without discussion of their implications for current and future budgets. Quarterly reports are either nonexistent or nonsensical.

The transparency problem begins with the city’s budget, which in 2020 was presented for the commission’s consideration in the space of only two meetings. At the commission’s regular July 22 meeting, Finance Director Carol Kirkpatrick gave an hour-long budget overview, during which she kept to general statements. Her presentation did not touch on capital projects, whose projected 2020-21 costs totaled $12.5 million or 35 percent of the $35.5 million budget. The city commissioners remained mostly mute, providing no input or direction to city staff. No public comment was allowed, and no public hearing on the budget was held.

At a special meeting on July 29, two days before the deadline for submitting the budget for the fiscal year that began July 1, 2020 to the state, Madrid said nothing in the budget had changed from the week before. Instead, he directed the commissioners’ attention to the fourth-quarter financial report. State law requires local governing bodies to approve only one quarterly report—the fourth quarter’s—since the beginning balances in the budget for the following year are determined by prior year’s ending balances.

The T or C city commissioners passed both the fourth-quarter report and then the final budget with little comment. Again, no public comment was allowed, and no public hearing on the budget was held. 

Since the budget was approved last July, Madrid has presented no capital projects report beyond informing the commission at its August 19, 2020, meeting that during his then 18-month tenure the total commitments made by the city to capital projects had increased from around $4 million to $20 million.

Six months passed before the city commission received a financial report. At its Jan. 27 meeting, Finance Director Kirkpatrick delivered “second-quarter” reports that covered July 2020 through December 2020. Presented in a format of her own devising consisting of 10 sub-reports, her puzzle-piece approach provided a fragmented picture of city finances.

The commissioners would have been better served had Madrid and Kirkpatrick chosen to present the quarterly report that state law requires municipalities to present to the New Mexico Department of Finance and Administration.

Unlike the DFA quarterly reports, Kirkpatrick’s separated revenues from expenses and did not compare either to the budget T or C had submitted to the state. Kirkpatrick’s reports also did not include transfers from one fund to another, as required in the DFA quarterly reports. Capital projects were not named in Kirkpatrick’s reports nor gathered under one rubric. How long-term debt was assigned to past or ongoing capital projects was difficult to discern.

The Sun asked Madrid and Kirkpatrick why the second-quarter reports given to the city commission were structured so differently from the required DFA report, since their format left the city commission and the public none the wiser on how closely the city is following the budget, if expected revenues have come in, if expenses need to be cut back and if capital projects are on track. Since the city has a long history of transferring millions of dollars out of the utility departments to the general fund, the Sun also asked why transfers were not included in the city’s second-quarter reports.   

Madrid did not respond to the Sun’s questions.

In a Feb. 3 email, Kirkpatrick explained that her intent had been “to present a comparison of the 2nd quarter revenues and expenditures for the fiscal years of 2017, 2018, 2019, and 2020.”

“Never was it presented that the reports would compare where we are now in comparison with the current year’s budget,” Kirkpatrick said.

Asked by the Sun for his perspective on T or C’s financial reporting practices, Michael Steininger, the DFA’s Local Government Division troubleshooter, said he always recommends that city or county staff present all four DFA quarterly reports to their governing boards.

DFA Local Government Division troubleshooter Michael Steininger recommends that city and county finance department staffs present the four quarterly financial reports they must submit to the DFA to their governing bodies as well. “The staff can’t manipulate the DFA quarterly report under penalty of perjury,” he explains.

“I think they should know what is filed with the state,” Steininger said. “The staff can’t manipulate the DFA quarterly report under penalty of perjury. What staff told the governing body often doesn’t resemble what is sent to the government.”

Formal governing-body approval of DFA quarterly reports also protects staff. “If the governing body doesn’t care and something goes wrong—as it inevitably does—elected officials can say, ‘Why didn’t you say anything?’” Steininger said. “The governing board is legally responsible for the finances, and it is their job to ask questions.”

Steininger said, that if city or county staff presents a quarterly budget report in a format other than the DFA’s required format, they are usually following their budget’s format. “Most governmental entities use three budget divisions: payroll—usually the most expensive—operations and capital projects.” Not tracking these divisions separately or “switching money between them” can create reporting problems, he said.

Steininger gave the example of a city’s taking money from unfilled positions and putting it into capital projects, leaving the city shorthanded. Conversely, overspending on payroll or unneeded capital projects will result in a neglected infrastructure, Steininger said, “which, unfortunately, is not unusual.”


Asked by the Sun about her untraditional reporting on transfers, capital projects and long-term debt, Finance Director Kirkpatrick responded: “The Commission is fully aware of the budgeted transfers from enterprise funds as it was presented in the annual budget approved by the Commission and the DFA. Handout #2 Expenditure Report for All Funds clearly shows the expenditures for every fund, including capital projects and long-term debt.”

The Sun examined Handout #2, included in the commission’s Jan. 27 packet, in an attempt to identify capital projects expenditures. The report is 35 pages long and gives expenses, not by department, but by fund. Thirty-six funds are listed, some with accompanying line items stating “Construction Cost,” or “Capital Improvement” or “Capital Purchase.” It is impossible to match a fund to a specific capital project.

The Sun found one fund (as opposed to a line item within a fund) labeled “Capital Improvements” on page 243 of the packet. It is duplicated here:

Fund 315: Capital Improvements

                                                      2017          2018          2019            2020

Professional services                                                                        19,063

Maintenance and repair-Grounds                                                 48,257

Capital Improvements                                                                  206,318

Land Acquisition/Improvements                                                 30,093

This example demonstrates the futility of comparing past mid-year expenses to current mid-year expenses by fund. Prior city finance officers obviously kept the books differently than Kirkpatrick, since it is unlikely there were no capital improvements expenses in years past. It is also unlikely expenditures on the city’s projected $20 million in capital projects are as low as about $300,000 mid-year.

The city apparently has no internal mechanism for tracking capital project expenditures either. The Sun’s recent Inspection of Public Records Act request for the most recent capital projects report was denied by the city clerk with the explanation that “No such document exists.”

Steininger said of the city’s scattered reporting of capital projects expenses throughout various funds: “The DFA recommends you run capital projects through a separate fund.”

Despite its title, Handout #2 does not total all the city’s expenditures to date, making it impossible to gauge, mid-year, if expenses are around 50 percent of the projected $35.5 million budget.


The DFA approved the city’s budget in an Aug. 18, 2020, letter, but warned, “Due to estimated expenditures and transfers exceeding estimated revenue, your entity’s General Fund cash balance is being depleted by -8.23 percent. Careful control of expenditures and attention to revenue collection efforts is recommended to avoid further depletion of reserves.”

T or C’s 2020-21 budget estimates $31,708,901 in revenue and $35,478,966 in expenses, with the nearly $4.4 million difference to be made up in transfers. Of the $4.4 million, nearly $2.8 million will be transferred out of “enterprise funds,” which means the deficit spending will be paid for with utility fees. About $1.66 million out of the electric fund, nearly $293,000 out of the wastewater fund, nearly $395,000 out of the solid waste fund and nearly $436,000 out of the water fund will be transferred to various operating funds.

Steininger said of the city’s practice of invading its utility funds to cover operations: “Each enterprise fund should be independent.” In other words, utility revenues should be used to pay for the utility’s operations and maintenance, capital projects involving that utility and payment of the utility’s debt.

If money is regularly transferred out of enterprise funds, he elaborated, “The people are paying an additional tax with no say. It’s not illegal, but in my opinion, it is unethical.”

Steininger said numerous transfers, especially from one fund to another fund and then back again, can indicate “smoke and mirrors” to “obscure what is really happening within the fund.”

The city budget states nearly $4.4 million will be transferred out of 11 funds into 18 funds. Five of the fund transfers will crisscross, obscuring what is happening in the sending and receiving funds.


The city’s second-quarter DFA report indicated expenses in the following funds were significantly beyond the expected 50 percent mark and therefore were worrisome.

Economic Community Development Fund: Line item “Contractual Services,” $98,968 was budgeted, but $348,118 has been spent so far, making the line item 351.75 percent over budget. Line item “Furniture/fixtures,” budgeted at $500, with about $7,300 spent so far, is 1,453 percent over budget.

• Parks and Recreation Fund: Line item “Capital Purchases,” $0 was budgeted, but $236,410 has been spent so far, making the line item “inf” or infinitely over the yearly budget.

• Lodgers Tax Fund: Yearly revenue was budgeted at $412,000, which has already been “fully realized” mid-year, meaning the budget estimate was underestimated by a wide margin.

• Governing Body Fund: Line item “Professional Services,” with a sub-line item for attorney fees, is budgeted at $63,000, which appears reasonable. However, the second sub-line item, described as “Other Services,” is budgeted at $73,000, with nearly $42,000 expended so far this year. If both line items are for attorneys’ fees, splitting and obscuring a nearly $140,000 expense, it warrants questioning. Manager Madrid has not reported publicly on any litigation, although several executive sessions have included pending or actual litigation as discussion items.

• Manager Fund: Line item “Professional Services,” budgeted at $0, with $3,400 spent so far, is “inf” over budget. Line item “General Office Supplies,” budgeted at $1,500, with $2,325 spent so far, is 155 percent over budget. Line item “Furniture/fixtures,” budgeted at $0, with nearly $3,000 spent so far, is infinitely over budget. Line item “Employee Training” is budgeted at $14,000, although only $300 has been spent so far.

• Finance/Budget/Accounting Fund: Line item “Contract-Other Services” is budgeted at $29,500, an unexplained expense that warrants investigation, since salaried staff should be handling the work of the department. Line item “Software,” budgeted at nearly $16,000, is also a large expense, with over $10,000 expended so far. Line item “Employee Training,” is budgeted at $8,000, although only $50 has been spent so far.

In his government staff trainings and in his interview with the Sun, Steininger emphasized that the local governing body is ultimately responsible for passing a good budget and sticking to it. “Budgets are monetary plans, communication tools, public policy,” he explained, “and legally-binding contracts.”   

Kathleen Sloan is the Sun’s founder and chief reporter. She can be reached at or 575-297-4146.
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Understanding New Mexico's proposed new social studies standards for K-12 students

“The primary purpose of social studies is to help young people develop the ability to make informed and reasoned decisions for the public good as citizens of a culturally diverse, democratic society in an interdependent world.”
—National Council for the Social Studies 

Reader Michael L. Hayes of Las Cruces commented: What impresses me is that both the proposed standards and some of the criticisms of them are equally grotesque. I make this bold statement on the basis of my experience as a peripatetic high school and college English teacher for 45 years in many states with many students differing in race, religion, gender and socioeconomic background, and as a civic activist (PTA) in public education (My career, however, was as an independent consultant mainly in defense, energy and the environment.)

The proposed social studies standards are conceptually and instructionally flawed. For starters, a “performance standard” is not a standard at all; it is a task. Asking someone to explain something is not unlike asking someone to water the lawn. Nothing measures the performance, but without a measure, there is no standard. The teacher’s subjective judgment will be all that matters, and almost anything will count as satisfying a “performance standard,” even just trying. Students will be left to wonder “what is on the teacher’s mind?” or “have I sucked up enough.”

Four other quick criticisms of the performance standards. One, they are nearly unintelligible because they are written in jargon. PED’s use of jargon in a document intended for the public is worrisome. Bureaucrats often use jargon to confuse or conceal something uninformed, wrong or unworthy. As a result, most parents, some school board members and more than a few teachers do not understand them.

Two, the performance standards are so vague that they fail to define the education which teachers are supposed to teach, students are supposed to learn, and parents are supposed to understand. PED does not define words like “explain” or “describe” so that teachers can apply “standards” consistently and fairly. The standards do not indicate what teachers are supposed to know in order to teach or specify what students are supposed to learn. Supervisors cannot know whether teachers are teaching social studies well or poorly. The standards are so vague that the public, especially parents or guardians, cannot know the content of public education.

Three, many performance standards are simply unrealistic, especially at grade level. Under “Ethnic, Cultural and Identity Performance Standards”; then under “Diversity and Identity”; then under “Kindergarten,” one such standard is: “Identify how their family does things both the same as and different from how other people do things.” Do six-year-olds know how other people do things? Do they know whether these things are relevant to diversity and identity? Or another standard: “Describe their family history, culture, and past to current contributions of people in their main identity groups.” (A proficient writer would have hyphenated the compound adjective to avoid confusing the reader.) Do six-year-olds know so much about these things in relation to their “identity group”? Since teachers obviously do not teach them about these other people and have not taught them about these groups, why are these and similar items in the curriculum; or do teachers assign them to go home and collect this information?

Point four follows from “three”; some information relevant to some performance measures requires a disclosure of personal or family matters. The younger the students, the easier it is for teachers to invade their privacy and not only their privacy, but also the privacy of their parents or guardians, or neighbors, who may never be aware of these disclosures or not become aware of them until afterward. PED has no right to design a curriculum which requires teachers to ask students for information about themselves, parents or guardians, or neighbors, or puts teachers on the spot if the disclosures reveal criminal conduct. (Bill says Jeff’s father plays games in bed with his daughter. Lila says Angelo’s mother gives herself shots in the arm.) Since teacher-student communications have no legal protection to ensure privacy, those disclosures may become public accidentally or deliberately. The effect of these proposal standards is to turn New Mexico schools and teachers into investigative agents of the state and students into little informants or spies.

This PED proposal for social studies standards is a travesty of education despite its appeals to purportedly enlightened principles. It constitutes a clear and present danger to individual liberty and civil liberties. It should be repudiated; its development, investigated; its PED perpetrators, dismissed. No state curriculum should encourage or require the disclosure of private personal information.

I am equally outraged by the comments of some of T or C’s school board members: Christine LaFont and Julianne Stroup, two white Christian women, who belong to one of the larger minorities in America and assume white and Christian privileges. In different terms but for essentially the same reason, both oppose an education which includes lessons about historical events and trends, and social movements and developments, of other minorities. They object to the proposal for the new social studies standards because of its emphasis on individual and group identities not white or Christian. I am not going to reply with specific objections; they are too numerous and too pointed.

Ms. LaFont urges: “It’s better to address what’s similar with all Americans. It’s not good to differentiate.” Ms. Stroup adds: “Our country is not a racist country. We have to teach to respect each other. We have civil rights laws that protect everyone from discrimination. We need to teach civics, love and respect. We need to teach how to be color blind.”

Their desires for unity and homogeneity, and for mutual respect, are a contradiction and an impossibility. Aside from a shared citizenship, which implies acceptance of the Constitution, the rule of law and equality under the law, little else defines Americans. We are additionally defined by our race, religion, national origin, etc. So mutual respect requires individuals to respect others different from themselves. Disrespect desires blacks, Jews or Palestinians to assimilate or to suppress or conceal racial, religious or national origin aspects of their identity. The only people who want erasure of nonwhite, non-Christian, non-American origin aspects of identity are bigots. Ms. LaFont and Ms. Stroud want standards which, by stressing similarities and eliding differences, desire the erasure of such aspects. What they want will result in a social studies curriculum that enables white, Christian, native-born children to grow up to be bigots and all others to be their victims. This would be the academic equivalent of ethnic cleansing.


This postmortem of a case involving a 75-year-old women who went missing from her home in Hillsboro last September sheds light on the bounds of law enforcement’s capacity to respond, especially in large rural jurisdictions such as Sierra County, and underscores the critical role the public, as well as concerned family and friends, can play in assisting a missing person’s search.

Reader Jane Debrott of Hillsboro commented: Thank you for your article on the tragic loss of Betsey. I am a resident of Hillsboro, a friend of Rick and Betsey, and a member of H.E.L.P. The thing that most distresses me now, is the emphasis on Rick’s mis-naming of the color of their car. I fear that this fact will cause Rick to feel that if he had only gotten the facts right, Betsey may have been rescued before it was too late. The incident was a series of unavoidable events, out of everyone’s control, and we will never know what place the correct color of her car may have had in the outcome. It breaks my heart to think that Rick has had one more thing added to his “what ifs” concerning this incident.

Diana Tittle responded: Dear Jane, the Sun undertook this investigation at the request of a Hillsboro resident concerned about the town’s inability to mount a prompt, coordinated response to the disappearance of a neighbor. From the beginning, I shared your concern about how our findings might affect Betsy’s family and friends. After I completed my research and began writing, I weighed each detail I eventually chose to include against my desire to cause no pain and the public’s right to know about the strengths and limitations of law enforcement’s response and the public’s need to know about how to be of meaningful assistance.

There was information I withheld about the state police investigation and the recovery. But I decided to include the issue of the car’s color because the individuals who spotted Betsy’s car emphasized how its color had been key to their identification of it as the vehicle described in Betsy’s Silver Alert. Because the misinformation was corrected within a couple of hours, I also included in this story the following editorial comment meant to put the error in perspective: “The fact that law enforcement throughout the state was on the lookout in the crucial early hours after Betsy’s disappearance for an elderly woman driving a “light blue” instead of a “silver” Accord would, in retrospect, likely not have changed the outcome of the search” [emphasis added].

I would also point to the story’s overarching conclusion about the inadvisability of assigning blame for what happened: “In this case, a perfect storm of unfortunate circumstances, many of them beyond human control, hindered the search that it would fall to Hamilton’s department to lead.”

It is my hope that any pain caused by my reporting will eventually be outweighed by its contribution to a better community understanding of what it will take in the future to mount a successful missing person’s search in rural Sierra County.

1 thought on “Lack of fiscal transparency still the rule for City of Truth or Consequences”

  1. Great article on the budgeting and financial reporting! I just would like to understand if you think the problem is only with the budgeting and budget vs. actual reporting procedures, or if you also think that money is being spent where it shouldn’t be spent?

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