Budget review concerns Los Lunas Village Council

LOS LUNAS — A resolution brought before the Los Lunas Village Council regarding mid-year budget adjustments evolved into a broader discussion of concern about budget transparency, communication and best practices.

Los Lunas finance director Cheryl Cates explained at the Feb. 27 council meeting that come mid-year, they evaluate the budget to see where they stand and to make any budget adjustments necessary, which is then brought before the council for approval.

Before Cates began her presentation, Councilor Gino Romero addressed an overarching concern observed in the budget, noting that it appears that they are either overspent or outside of budget by almost $7 million, which Cates confirmed.

“How did we get here, and how is the council just being notified of this today?” Romero asked.

Cates responded there are no protocols or practices in place within the village to where approval must be obtained to stand over budget on a line item.

“I do not know when this happened, whether it was in recent past history or it’s always been this way, but the responsibility for the budget and maintaining the spending per budget line has been divested to the departments, instead of being overseen by finance,” Cates responded. “So quite honestly, I find out about this after the fact the same way you guys do.”

“I have an issue with that, just from the standpoint that ultimately the public comes to us and says, ‘You guys, approve the budget,’ and being that we’re not told about changes, I really believe that’s something that needs to change, and needs to change fast,” said Romero.

Cates agreed, saying they should all sit down and discuss how that change should be implemented, as it would take a change in procedures and protocols, as well as a cultural shift.

Cates then highlighted the main budget adjustments in her presentation, noting the infrastructure fund is over budget by about $5 million. She did not have many details as to why, saying additional information would have to come from the public works director.

“Now, what he has expressed to me is that most of the problem has been cost increases in material, but to be any more specific than that, he would need to speak to that,” she said.

Following the conclusion of her presentation, Romero asked Cates what would be needed in order to have better checks and balances and reporting.

“I never worked anywhere where we did not have some kind of a procurement or division or buyers that were in charge of going out for quotes, making sure that everything was priced right when it comes in. Right now, all of that responsibility lies on our department heads, and they have a lot on their plate,” Cates responded, adding there is not a checks-and-balance system in place as far as spending limits that she is aware of.

“I know there’s increases in prices and stuff, but that $5 million (in infrastructure), that’s kind of hard to bite,” said Councilor Chris Ortiz.

Mayor Charles Griego noted there’s flexibility within the infrastructure budget, and that it’s not budgeting every line item to that line item; it’s budgeting to the overall expense within that item.

Cates responded it is not necessarily the case, as when they finished working on the infrastructure fund most of the money was allocated within that fund to specific projects, and she expressed concern in moving money from bucket to bucket.

“I kind of have a problem with that, because I don’t see it being transparent, and that’s a discussion that I’ve had with several unhappy people over the last couple years,” she said. “If we’re going to be over budget on a line item, then let’s call it what it is, simply because then we can go back and reference it.”

The mayor responded that there needs to be more transparency and communication to the council about the budget, as they are not there full time.

“If we’re getting over budget in a project, and projects or priorities are being changed, this council needs to know,” said Griego.

Cates questioned how she can do that effectively if she also is only finding out after the fact.

“Then it’s a cultural change,” Griego responded. “We’re having (an upcoming) meeting on objectives. This could be one part of it. The not knowing and why things aren’t getting done bothers me, but also with every dang thing we bid, we estimate x amount of dollars, and it comes to be x plus x and another half.”

“I understand that there’s things that happen,” said Romero. “That’s just life, but the fact that nobody’s signing off on these, that is a problem, because then we get this. We get $5 million that we’re over budget. Why? Why don’t we know?”

Griego suggested that Cates can come before the council more often to keep the council informed to which she agreed.

Councilor James Runyon said the infrastructure being over budget in that amount isn’t a big surprise to him considering how much infrastructure and construction prices have gone up in recent years, saying his main concern is more so transparency.

“I have no doubt our people are being honest and spending every dollar the best they can,” said Runyon. “I don’t think that’s a discussion that we need to worry about having, but I think we need to make sure that if it’s going over, we have a good answer as to why it went over and exactly what happened.”

Village Administrator Greg Martin said they will improve information sharing with the council and aim to complete projects as quickly as they can, because that affects the overall cost as well.

“The vast majority of our funds in this resolution at mid-year are in very good shape,” said Martin. “It’s just the infrastructure that basically went crazy this year, but we luckily had multi million dollars of fund balance to be able to absorb that, and that’s what we’re here explaining and trying to get approval after the fact, knowing that the direction of the council was to do these projects, get them done, and that was really the only way to move forward, was to rely on a healthy fund balance.”

Romero also said they should also take a closer look at day-to-day expenses and consider hiring procurement staff, because there is a lot of spending going on and there are likely several areas where spending can be done more efficiently.

“For example, I brought up the thing about the janitorial supplies. There’s an open checkbook for that; we haven’t done RFP (request for proposals) for that for a long time,” Romero said. “I asked why and was told we don’t have the ability to send it out for RFP, so how do we even know if we’re paying the best price?”

All councilors, excluding Romero, then voted in approval of the mid-year budget adjustments.