City: ’23 audit will not be finished until May

Would be fifth straight to be submitted after deadline; officials had previously said completion was on track

The city of Santa Fe announced Monday evening its financial audit for fiscal year 2023 is expected to be finished five months late.

City officials said in a news release issued after business hours Monday it has learned from an outside auditor the financial report will be completed and submitted to the State Auditor’s Office by May 15. The deadline is Dec. 15.

The release provided no specific cause for the delay.

“Like everyone, I’m frustrated. This is a systemic problem spanning at least 20 years,” City Councilor Carol Romero-Wirth wrote in an email after hearing the news.

This would be the fifth consecutive annual audit the city has submitted to the state months after the due date and its sixth late audit in seven years.

The announcement of the delay comes months after city officials said they expected the 2023 audit to be submitted on time. In recent weeks, however, Finance Director Emily Oster has declined to provide a possible completion date, noting her staff and outside auditing firms were still working to complete and submit the audit for fiscal year 2022 by a target date of Dec. 4, nearly a year behind schedule.

In an email late Monday, Oster wrote, “The FY23 audit timeline was communicated to the City today during the Entrance Conference meeting.”

Monday’s news release doesn’t mention the 2022 audit but points out the city will have submitted three audits to the state in 11 months. It completed the 2021 audit in late June — more than 18 months late.

“Typically, one audit takes eight months to complete. Completing three audits in eleven months is an extraordinary accomplishment and demonstrates the City’s deep commitment to correcting our history of late audits and ensuring the timelines are met moving forward, starting with FY2024,” City Manager John

Blair said in a statement.

Oster said in a statement, “Late audits have been a problem for the City for 13 out of the last 20 years, but the current team in the Finance Department is modernizing the City’s financial systems and processes in a way that going forward, late audits will be a thing of the past.”

Romero-Wirth made a similar comment.

“Modernization, changes to processes and important staffing hires are being made to address the issues,” she wrote in an email. “I’m confident in our leadership and the Finance Department employees who are setting a course for timely audits.”

Councilor Michael Garcia said he was “very disappointed” with the tone of the city’s news release and called the characterization of late audits as a 20-year problem “spin.”

“That’s a distraction at best,” he said. “Let’s focus on the now, which is that we’re almost a year late with one audit and will be late with another in a couple weeks.”

Garcia has repeatedly asked at recent City Council meetings for details on when finance officials expect the 2023 audit to be complete and said Monday’s news was unsurprising considering their reluctance to share that information.

In an emailed response to questions about the 2023 audit Monday night, Oster reiterated the city has worked to improve its financial systems. She also noted the effects of the coronavirus pandemic, which included declining revenue and a hiring freeze that led to a high staff vacancy rate in her department.

While the city has struggled to fill key accounting positions in the Finance Department, due to a nationwide shortage of workers with such skills, she added, “Staffing in the Finance Department is improving.”

Other city officials could not be reached for comment.

The late 2023 audit could pose more problems for the city when it comes to accessing state capital outlay. The Department of Finance and Administration notified the city in an August letter it would not be able to issue new grant agreements or bonded debt to Santa Fe until the city is back in compliance with audit requirements.

That means the city’s access to state funding for capital projects could now be delayed until May.

The letter was not disclosed to city councilors until the day before it was the subject of a New Mexican report, prompting frustration from councilors and calls from some for Blair to be fired or suspended. Councilors are expected to discuss a proposed three-day suspension for Blair at a meeting Nov. 29.

Meanwhile, the council has approved a resolution with a massive wish list for the upcoming 2024 legislative session, including a request for $88 million to overhaul an aging water treatment plant and tens of millions of dollars for other projects.

Santa Fe lawmakers have provided mixed responses to the city’s ongoing audit woes and the delayed capital outlay.

Senate Majority Leader Peter Wirth, who is married to Romero-Wirth, has said the issues would not affect his support for the city.

“My plan for the next legislative session is to do capital outlay just like I’ve done it for the past 20 years,” he said in early October.

Rep. Linda Serrato said at the time, “It is a very disappointing situation and is a consideration for myself as we’re looking forward to January.”

Garcia said he is worried about how Monday’s news will affect legislators’ confidence in city government, and added he will be reaching out to the Santa Fe delegation to discuss their concerns and how the city and state can move forward together.

The delay “puts us in a very challenging position holistically as a city government,” he said.