ALBUQUERQUE (KRQE) - Losses from Bernalillo County Treasurer Manny Ortiz's investment strategy are mounting, and now a year-old report has surfaced showing he ignored warnings about what is now happening.
Late Friday Bernalillo County commissioners announced plans for a no-confidence vote on Ortiz at a special meeting next week. It's the latest shot in the dispute over an investment strategy that leaves the county short of operating cash and could cost taxpayers millions dollars.
Commissioner Debbie O'Malley remembers getting the news
"It was not good. It was, 'Oh, no,'" O'Malley told KRQE News 13. "We have to be able to pay our bills, and we have to be able to meet our obligations when it comes to projects."
From parks to parking lots, the county has put off routine fixes and stopped projects cold because of a cash crunch. Commissioners say the money for the work is tied up in long-term investments made by the independently elected Ortiz and his chief investment officer, Patrick Padilla.
To get at the cash, the pair sold long-term investments early and at a loss.
"That's real cash. We've lost that--$800,000," O'Malley said. "That's a lot of money. And there's the potential to lose more, in the millions."
O'Malley, a Democrat, is calling for the no-confidence vote, and she has support even across the aisle in Republican Commissioner Wayne Johnson.
The investment decisions not only were bad, according to Johnson, they weren't new.
The investment strategy dates back to when Patrick Padilla was treasurer for the eight years before Ortiz took office. Padilla's chief investment officer for most of that time? Current Treasurer Ortiz.
"If you were looking for a change in administration, we didn't have one," Johnson said. "We have term limits in that office for a reason."
While the county's money woes are just spilling into public view, Johnson said financial pros hired by the county warned Ortiz and Padilla more than a year ago in the report uncovered by KRQE News 13.
"It really said the exact same thing that the RBC report said last month and the Slocum report said last month," Johnson said referring to outside consultants hired to review the investments.
The 2012 report said the treasurer's strategy could pay off but only if interest rates stayed at historic lows. Such strategies "often look attractive but with this comes risk," the report said.
Johnson said the warning couldn't have been clearer.
"This wasn't an advisable policy in the first place," Johnson said. "It looked good on the surface."
But with the threat to public projects and the county budget mounting, Padilla and then Ortiz continued the risky strategy pouring hundreds of millions in property tax receipts into the long-term investments.
As predicted interest rates are creeping up exposing holes in the treasurer's strategy.
Now the state Securities Division has begun an inquiry.
Ortiz and Padilla avoided KRQE News 13 Friday as they've avoided county commission meetings this month.
Ortiz sent commissioners a letter instead saying his plan earned the county more than $3 million and telling them to butt out. "Any unilateral action you take will simply lack force or effect," he wrote.
O'Malley said the county commission needs to do something.
"Enough is enough," she added. "This is our position on this issue."
A no-confidence vote would be little more than symbolic since Ortiz has independent authority as an elected official.
The mess does come at an inconvenient time for his investment advisor, however. Padilla is running for state treasurer where he'd be in charge of investing public funds for all of New Mexico.
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