SANTA FE, N.M. (KRQE) – The state’s top financial watchdog is stepping in with new oversight on the City of Santa Fe amid concern that millions of dollars have been mismanaged. It comes after an independent accounting firm contracted to complete an annual audit of Santa Fe’s financials recently withdrew from the process.

“Apparently, there is $4-5 million in cash that was not reconciled by the agreed-upon deadline and therefore the City is not auditable,” State Auditor Brian Colón said in a press release. “The City continues to demonstrate a reckless disregard for compliance with statutory and regulatory requirements.”

Under state law, every local government and agency in New Mexico must submit a yearly audit to the state for review. While Santa Fe has participated in required annual audits, the city is now nearly four months behind on submitting its fiscal year 2021 audit.

Santa Fe generally contracts with an outside, national accounting firm to carry out the audit. The process is supposed to give an overview of the city’s finances and the results of money spent on various operations. The state auditor argues in part that the city has “failed to prioritize timeliness,” and refused to “take years of concerns raised” seriously.

“Citizens of Santa Fe have a right to know if the City is acting responsibly with their tax dollars,” Colón said. “But that is impossible when the City fails to timely deliver an independent and objective assessment on how those dollars are used.”

KRQE News 13 reached out to the City of Santa Fe. In a statement, they said they take the situation seriously.

“We have reached out to CLA [the auditing firm expected to conduct the audit] to better understand what caused the firm to provide us notice that it is withdrawing from our audit,” Dave Herndon, spokesperson for the City of Santa Fe said. “We anticipate official direction from the State Auditor regarding any and all required or recommended steps to correct any errors or processes. His guidance and any assistance he can bring to the table to help the City is welcome.  We recognize the gravity of the situation and take the implications of this development very seriously.”

KRQE News 13 reached out to the accounting firm hired by the City of Santa Fe, but did not receive a response as of 2 p.m. Tuesday. The State Auditor, however, says the situation is part of a “chronic” problem.

“We’ve had chronic troubles getting the City of Santa Fe to get their finances on track,” State Auditor Colón told KRQE News 13. “Santa Fe is in worse shape than I’ve seen it since I’ve been State Auditor of New Mexico.”

He equates the auditing process to balancing a checkbook, where funds coming in need to balance with funds coming out. But in Santa Fe, there are several million dollars that they’re not able to reconcile, he says. So now, the state will step in to help get the audit done.

This news comes as Santa Fe officials are proposing a new budget for fiscal year 2023. KRQE News 13 previously reported that the new budget could bring raises for city employees, first responders, and other city officials.