Interim NMFA boss thinks the state’s bond ratings can be saved
Print This Post
Unraveling the mess at the New Mexico Finance Authority is going to take time but the new interim boss at the authority thinks the biggest issue surrounding the fallout from a fraudulent audit — keeping Wall Street ratings agencies from downgrading the state’s bond ratings — can be avoided.“I think the basic financial structure that’s been put in place with this agency, I don’t think that’s been harmed,” John Gasparich told Capitol Report New Mexico on Friday morning (Aug. 17) after the NMFA Board announced he will take over as chief executive officer. “I think once we’ve established credibility with the financial community and with the local governments and so forth, I believe the bonds will be as good an investment as they ever were.”
Gasparich replaces former CEO Rick May who was placed on paid administrative leave last week. Brett Woods of the Department of Energy, Minerals and Natural Resources has been serving as CEO for the past few days with the understanding that he’d be replaced by someone with more experience in finance.
“I think what our charge is to facilitate [the investigations by the State Auditors Office and the State Regulation and Licensing Department] in any way we can,” Gasparich said. “We’ll provide any information in a timely manner and allow them to complete their work as quickly as possible.”
The State Auditors Office is poring over the NMFA’s numbers after a bogus audit was filed earlier this year. A former employee of the authority has been criminally charged with forging the numbers from Fiscal Year 2011 and the former chief operating officer who was the employee’s supervisor is also charged with multiple felony counts.
The state Securities Division, under the Regulations and Licensing Department, is also conducting a criminal investigation.
So when can New Mexico taxpayers expect to get some accurate numbers back from the NMFA, which controls millions of dollars in projects that affect municipalities and agencies across the state?
Probably not until well after the first of next year.
“I’m hopeful we can get throught the whole thing and be completely operational by the end of the legislative session if not sooner,” Gasparich said. The next legislative session runs from Jan. 13-March 16 of 2013.
“It would be great if we could be ahead of that [schedule] but I just don’t know for sure if we can do that,” Gasparich said.
That echoes was State Auditor Hector Balderas told Capitol Report New Mexico last week.
“We need to get the 2011 and 2012 fiscal year audits completed,” Balderas said last Thursday (Aug. 9th). “Those reports probably will not be reviewed and completed closer ’til next spring.”
In the meantime, Balderas says his office expects to deliver a report — a first phase, rough outline — to the NMFA Board in October.
Hanging over the controversy is a decision by Wall Street ratings firms such as Standard & Poor’s and Moody’s who have placed the state’s bond ratings on a watch list for possible downgrade.
Should the ratings agencies lower the bond ratings, taxpayers will have to pay more in higher interest payments on bond projects across the state.
Officials are hoping that when the investigations and audits (real ones, not fake ones) are completed, they’ll find all or almost all of the monies will be accounted for and that will reassure the ratings agencies and prevent a downgrade.
A decision from Moody’s and/or Standard & Poor’s is expected in October.
“That is the big question,” Gasparich said. “And certainly that’s why we have to be so diligent in terms of getting these audits and make sure that all that financial information is is out there and that the investors have complete information and complete confidence.”
Here’s the entire interview we had with the new interim CEO:
Some background on Gasparich: He has plenty of experience in finance and state government, serving as deputy secretary of the Department of Finance and Administration under former Gov. Gary Johnson. He was also the budget director for former governors Garrey Carruthers and Toney Anaya and currently sits on the Board of Finance.
In other NMFA news, the board on Friday approved a $1.25 million transfer to the special audit fund supervised by State Auditors Office. The money will help pay for the accounting firm PricewaterhouseCoopers to conduct the special audit.
“I’m glad the board appointed Mr. Gasparich,” Balderas said. “I think this will help lead to more stable decisions [at the NMFA].”
Posted under Capitol Report.
Tags: Brett Woods, Capitol Report New Mexico, Hector Balderas, John Gasparich, Moody's, New Mexico Finance Authority, NMFA, PricewaterhouseCoopers, Rick May, Standard & Poor's, State Auditor's Office, State Regulation and Licensing Department