State Department of Finance analysis gives T or C’s second-quarter performance a passing grade

by Kathleen Sloan | March 3, 2021
7 min read
T or C finance department offices
Underreporting of gross receipts tax revenues was the only "key issue" raised by the DFA’s mid-year analysis of T or C’s budget position. The city’s finance director claimed the mistake was made by the DFA. Photograph by Diana Tittle

New Mexico Department of Finance and Administration’s second-quarter analysis shows Truth or Consequences is doing fairly well in meeting revenue projections despite the dislocations of the pandemic. Its biggest revenue sources—gross receipts taxes and utility fees—were generally about 50 percent “realized” at mid-year.

The DFA analyst assigned to the city had only one “key issue” with the city’s quarterly report, stating: “GRTs underreported $44,680.49.”

T or C Finance Director Carol Kirkpatrick
T or C Finance Director Carol Kirkpatrick. Source: Facebook

T or C Finance Director Carol Kirkpatrick disclaimed responsibility for the error. “Analyst left off Environmental GRT $44,680.49. It was posted to an incorrect object code in DFA’s Chart of Accounts,” Kirkpatrick wrote directly on the analyst’s report.

DFA Public Information Officer Henry Valdez declined to respond to the Sun’s question about whether it was the city or DFA that had posted the GRT incorrectly. Valdez implied political correctness was more important than accountability. He requested the Sun not publish the analyst’s name, “since she has to work with these people,” referring to T or C finance department employees.

Monitoring gross receipts taxes is important because this revenue source contributes the most money to the city’s General Fund, which pays for all “governmental activities,” such as payroll for the city manager’s office, clerk’s office, finance office, human resources, community development, police department and other services that do not produce revenues.

Monitoring utility fee revenue is also important because it is the second-largest revenue source for funding municipal governmental activities.   

Government activities are supposed to be funded by taxes and government grants and business-like activities are supposed to be funded by user fees. These two major government functions are inextricably mixed in Truth or Consequences, therefore both revenue sources were examined by the DFA analyst.  

GRT REVENUE

The city’s GRT revenue, so far this fiscal year, is on par with prior years, according to the second-quarter financial report the city submitted to DFA.

In 2017, T or C took in nearly $4.6 million in GRT. GRT revenue totaled $4.1 million in 2018 and $5 million in 2019, the most recent yearly figure available in the annual audit reports the city submits to the New Mexico Office of the State Auditor.

T or C has collected a little over $2.1 million in GRT in the first six months of this fiscal year. If the revenue continues to come in at the same rate, GRT for the year may total $4.2 million. The city budgeted about $3.9 million in expected GRT, with $3.34 million assigned to the General Fund.

The DFA analyst noted the General Fund had somewhat overspent its budget at mid-year. The city’s combined revenue sources, including GRT, were 47.58 percent realized, but 53.93 percent of that revenue had been spent by the end of the second quarter. That is a -6.35 percent difference in revenue and expenses, the analyst’s chart states.

“Please note that if the activity in general funds continue in this trend and other funds, then the general fund cannot support transfers to cover activity,” the DFA analyst stated.

TRANSFERS

T or C’s second-quarter report shows the General Fund is budgeted to receive $4.38 million in revenues this fiscal year; $2.3 million had been received at mid-year.

By the end of the fiscal year, the General Fund is expected to spend $6.2 million or nearly $2.2 million more than the budgeted revenues. The difference will be made up by transfers. Over $2 million will be transferred out of utility fees and the remaining $200,000 will be transfers from other funds that spend down their cash balances.

Transfers are not considered revenue, since they simply shift money among city funds. As the DFA analyst noted, the General Fund will transfer $733,500 to other funds over the course of the fiscal year.

Kirkpatrick responded to the DFA analyst’s warning that the General Fund’s “burn rate” was too fast. The city expects to make up the current budgetary shortfall when it receives a $300,000 “Small Cities Assistance” grant from the state, $30,000 from leasing the water tower to a communications company and reimbursements on capital projects once loans and grants come in.  

The amounts of Small Cities Assistance grants are dependent on the state’s revenue, which is tallied and divvied up during each year’s legislative session. The Sun asked the DFA’s Valdez if cities can expect to get their full apportionment this year. Valdez replied that the answer must await the end of the legislative session.

Transfers are a means of making up for deficit spending in the General Fund, but also for shortfalls in other areas of the budget. In this fiscal year, transfers will make up a $4.7 million shortfall in revenue to meet the city’s $35.5 million budget. The utilities, water, wastewater, solid waste and electric departments will contribute $2.66 million, covering nearly 57 percent of the shortfall. The remaining $2.04 million will come from the city spending down cash balances in other funds.

UTILITY FEES

Utility fee revenues are higher than budgeted at mid-year.  

The water department was expected to collect $1.09 million for the fiscal year, but had realized 71.21 percent of those revenues, or nearly $779,000, by the end of the second quarter. The city raised water fees by nearly 50 percent last summer.

The solid waste department expected to collect nearly $2.2 million this fiscal year. It had realized $1.1 million or 51 percent at mid-year. The city has raised solid waste fees by 5 percent every year for the last four years.

The wastewater department budgeted $1.14 million in fees and had realized nearly 52 percent, or about $591,000, at mid-year. The city has raised wastewater fees by 5 percent every year for the last four years.

The electric department budgeted $7.3 million in fees and had realized 53.6 percent, or $3.9 million, at mid-year.

Of the $2.66 million the city expected to transfer out of utilities funds, $1.35 million or 50.8 percent had been transferred out by mid-year.

LOW REVENUE AND/OR HIGH SPENDING IN OTHER FUNDS

The Corrections Fund had received 20.68 percent of its expected revenue at mid-year and had spent 40.51 percent of that total, a nearly -20 percent difference between revenue and expenses, the analyst’s report states.  

The Recreation Fund had received no revenues, but had expended 34.54 percent of its budget. T or C Finance Director Carol Kirkpatrick noted on the DFA report that “Recreation is the Swimming Pool, which is always supported by the General Fund.” The pool has been closed during the pandemic, Kirkpatrick stated, and is taking in no revenue. 

The Other Special Revenue Fund, a repository of mostly loans from financing agencies and government grants, had taken in 10.09 percent of expected revenue by mid-year and expended 11.14 percent of the budgeted revenue. The DFA analyst noted the -1.05 percent difference between revenues and expenses was “okay.”

The Other Federally Funded Programs Fund had received 1.43 percent of expected revenue by mid-year and expended 6.19 percent of the budgeted revenue. The difference of -4.76, according to the DFA analyst, was “okay.”

The Other Capital Projects Fund had received only .43 percent of expected revenue, with 2.81 percent of the budgeted revenue expended. The -2.38 percent difference was “okay,” the DFA analyst noted.

The Joint Utility Office Fund had received 21.34 percent of expected revenue and spent 46.77 percent of its budget, a -25.43 percent difference. “Activity is depleting cash,” the DFA analyst stated. Kirkpatrick replied that the utility office does not take in money and depends on transfers from the utility funds for its revenue.

OTHER MAJOR SOURCES OF GENERAL FUND REVENUES

The DFA analyst’s report also includes a check list of other major sources of revenue for the city’s General Fund.

Property taxes collected by mid-year totaled $79,550, compared to $9,317 at the same time last year. The city has budgeted about $173,000 in property tax revenue this year, which is on par with prior years.  

The General Fund had already received its yearly allotment, amounting to $26,600, from the state for the Law Enforcement Protection Fund, the DFA analyst stated.

The city had no legislative appropriation this fiscal year, the analyst stated. City Manager Morris Madrid, whose resignation takes effect March 5, said last year he submitted a capital outlay request for this fiscal year, but then state Senator John Arthur Smith refuted that claim, stating Madrid refused to see him when he visited his office to collect the paperwork.

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Kathleen Sloan is the Sun’s founder and chief reporter. She can be reached at kathleen.sloan@gmail.com 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.

H.E.L.P.

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.

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