SANTA FE, N.M. (AP) — New Mexico’s government is making progress toward more accurate accounting but still earned a “D” grade on Tuesday from a government finances watchdog group, largely because of unfunded pension and retiree health care obligations.
Chicago-based Truth in Accounting estimated that New Mexico had $7.7 billion in unfunded financial obligations or about $13,300 per taxpayer, based on the state’s most recent audited comprehensive annual financial report.
That places New Mexico behind 33 other states for unfunded debts and obligations, according to the nonprofit group that analyzes the balance sheets of 50 state governments each year.
The calculations by Truth in Accounting do not consider New Mexico’s $24 billion stockpile in two state permanent funds that can only be spent for specific purposes. New Mexico also is experiencing a surge in tax revenues and other annual general fund income linked to record breaking oil and natural gas production, allowing lawmakers this year to increase annual spending by nearly 12 percent while setting aside larger reserves.
Truth in Accounting CEO Sheila Weinberg said that the state’s balanced general fund budget does not account for many long-term spending obligations.
“They’re really not balancing their budget because they’re not including all of the pension and retiree health care costs,” she said. “When citizens hear the budget is balanced, they assume that everything is fine.”
The Department of Finance and Administration had no immediate comment on the analysis in response to requests by phone.
But Weinberg praised New Mexico for progress in publishing more timely and accurate information in its annual financial report for the fiscal year that ended on June 30, 2018. That was the last complete state fiscal year overseen by the administration of Republican Gov. Susana Martinez, who termed out of office at the end of 2018.
In prior years, independent auditors said they could not provide opinions about major areas of New Mexico state finances for lack of complete or reliable information. The new report shows greater overall confidence in the state’s bookkeeping, with insufficient evidence still cited in areas ranging from emergency management to a compensation fund for medical malpractice.
In efforts to contain unfunded pension liabilities, the state is limiting the rapid accrual of pension benefits for educators hired since July 1 until they surpass 20 years of service.
A task force appointed by first year Democratic Gov. Michelle Lujan Grisham is outlining ways to reduce pension obligations to state and local government employees in part by changing future cost-of-living adjustments.