New Mexico 2025 Regular Session

New Mexico Senate Bill SM8 Compare Versions

Only one version of the bill is available at this time.

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28	28	SENATE MEMORIAL 8
29	29	57
30	30	TH LEGISLATURE
31	31	- STATE OF NEW MEXICO -
32	32	FIRST SESSION
33	33	, 2025
34	34	INTRODUCED BY
35	35	Pete Campos
36	36	A MEMORIAL
37	37	REQUESTING THE STATE AUDITOR TO CONVENE A WORK GROUP TO STUDY
38	38	FINANCIAL OVERSIGHT AND CAUSES OF DEFICIENCY APPROPRIATION
39	39	REQUESTS AND MAKE RECOMMENDATIONS TO IMPLEMENT RECOMMENDATIONS
40	40	OF THE STATE AUDITOR'S OFFICE RELATED TO DEFICIENCY
41	41	APPROPRIATION REQUESTS.
42	42	WHEREAS, during the 2024 regular session of the
43	43	legislature of the state of New Mexico, the state auditor was
44	44	asked to review state agency deficiency appropriation requests
45	45	due to the increasing frequency and magnitude of those
46	46	requests, which creates opportunity costs for the use of
47	47	appropriated funds; and
48	48	WHEREAS, following an informal work group meeting with
49	49	legislative finance committee staff, the government
50	50	accountability office of the office of the state auditor
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78	78	reviewed financial audits and collaborated with staff from the
79	79	legislative finance committee and the department of finance and
80	80	administration to gather additional information related to
81	81	deficiency appropriation requests; and
82	82	WHEREAS, a transparency report by the state auditor's
83	83	government accountability office showed that state agency
84	84	deficiency appropriation requests increased by one hundred
85	85	thirty-seven million five hundred thousand dollars
86	86	($137,500,000) from 2014 to 2024, signaling a troubling trend
87	87	in state agency financial management practices, including some
88	88	that may require budgetary enforcement measures to prevent
89	89	recurrence; and
90	90	WHEREAS, the report also revealed that in some cases state
91	91	agencies failed to provide justifications to the department of
92	92	finance and administration for deficiency appropriation
93	93	requests and some agencies bypassed the department's formal
94	94	deficiency request process entirely; and
95	95	WHEREAS, it was also noted that justifications offered by
96	96	departments for deficiency appropriation requests were often
97	97	linked to causes including over-expenditures, improper
98	98	reversions, long-standing hidden deficits, failure to adhere to
99	99	budget authority and unpaid expenditures from prior years; and
100	100	WHEREAS, the increasing number of deficiency appropriation
101	101	requests is a concern for all state financial oversight
102	102	entities, including the state auditor, as it may signal
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131	131	noncompliance with laws and regulations; and
132	132	WHEREAS, current statutes and rules do not adequately
133	133	address modern fiscal concerns and there is a lack of clarity
134	134	with respect to authority and responsibility over different
135	135	aspects of budget management; and
136	136	WHEREAS, several statutes that address warrants and
137	137	overpayments; budgetary controls and penalties; and other
138	138	budgetary controls conflict with other statutes, some of which
139	139	date back to when New Mexico was not yet a state; and
140	140	WHEREAS, most of these statutes became law before the
141	141	state adopted the current SHARE financial management system,
142	142	and workaround methods had to be developed to allow financial
143	143	processes and payments to take place within that system; and
144	144	WHEREAS, key recommendations from the office of the state
145	145	auditor's government accountability office's transparency
146	146	reports include modernizing, clarifying and planning for the
147	147	future of practices and budgetary framework statutes and
148	148	include:
149	149	A. to improve transparency it is recommended that:
150	150	(1) the department of finance and
151	151	administration and the legislative finance committee
152	152	collaborate to improve the transparency of deficiency
153	153	appropriation requests during budget hearings;
154	154	(2) in the absence of direct links between
155	155	financial statements and deficiency appropriation requests,
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184	184	state agencies and oversight entities work together to provide
185	185	clear explanations for the public on the reasons for
186	186	shortfalls;
187	187	(3) the department of finance and
188	188	administration and the legislative finance committee require
189	189	state agencies to provide more written details and supporting
190	190	documents for deficiency appropriation requests in their annual
191	191	budget submissions; and
192	192	(4) if state agencies fail to submit the
193	193	required information for review of deficiency requests, the
194	194	legislature consider withholding funding for those requests;
195	195	B. the addition of more audit procedures, which
196	196	would provide for the office of the state auditor to require
197	197	independent public accountants to conduct additional state law
198	198	compliance procedures with respect to entities that submit
199	199	deficiency appropriation requests, to allow public review of
200	200	how the appropriations affect financial statements;
201	201	C. to enhance review processes it is recommended
202	202	that:
203	203	(1) the legislature and governor consider
204	204	whether to continue funding deficiency appropriation requests;
205	205	(2) if deficiency appropriation requests are
206	206	funded, a more formal process be used, which would include
207	207	increased rigor, transparency, accountability and performance
208	208	metrics related to budget and appropriation adherence; and
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237	237	(3) the department of finance and
238	238	administration and state agencies prepare for the possibility
239	239	that deficiency appropriation requests will not be granted by
240	240	the legislature and develop strategies to address deficit
241	241	balances when requests are not granted;
242	242	D. required review of penalties for budget
243	243	violations, including:
244	244	(1) the legislature's, department of finance
245	245	and administration's and independent accounting firms' review
246	246	of Chapter 6, Article 10 NMSA 1978, related to expenditure of
247	247	funds and penalties for violations of budgetary controls;
248	248	(2) the legislature's and the department of
249	249	finance and administration's review of whether additional
250	250	measures are needed to enforce budgetary discipline, given the
251	251	fact that current law only considers penalties for violations
252	252	such as the failure to close the year with a positive fund
253	253	balance; and
254	254	(3) consideration of whether the state should
255	255	update the SHARE financial management system and conduct a
256	256	thorough review and update of all financial-related statutes
257	257	before updating the system; and
258	258	E. a required review of laws related to budget
259	259	adjustments and oversight to improve state budgetary controls
260	260	and to strengthen the effectiveness of the state's budgeting
261	261	process;
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290	290	NOW, THEREFORE, BE IT RESOLVED BY THE SENATE OF THE STATE
291	291	OF NEW MEXICO that in recognition of the need for more
292	292	transparent, accountable and legally compliant fiscal
293	293	management processes and budgetary oversight of operations that
294	294	lead to deficiency appropriations, the senate support the
295	295	implementation of the office of the state auditor's
296	296	recommendations and support a comprehensive study to improve
297	297	financial oversight and address the root causes of deficiency
298	298	requests; and
299	299	BE IT FURTHER RESOLVED that the office of the state
300	300	auditor be encouraged to convene a work group, including
301	301	representatives from the legislative finance committee, the
302	302	department of finance and administration, the office of the
303	303	state treasurer and other members of the executive branch, to
304	304	draft legislation for the legislative finance committee's
305	305	endorsement; and
306	306	BE IT FURTHER RESOLVED that legislation proposed by the
307	307	work group should be developed with consideration of the
308	308	proposed reforms recommended by the state auditor and focus on
309	309	increased transparency in budget hearings, the implementation
310	310	of stronger compliance and enforcement mechanisms and inclusion
311	311	of a more centralized department of finance and administration
312	312	oversight function; and
313	313	BE IT FURTHER RESOLVED that copies of this memorial be
314	314	transmitted to the governor, the secretary of finance and
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343	343	administration, the director of the legislative finance
344	344	committee and the office of the state auditor.
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