New Mexico's most populous county is facing a budget crunch amid allegations that its treasurer's office mismanaged more than $250 million in its investment portfolio, a situation that has triggered state investigations and a recall drive.
Bernalillo County, which includes about a third of the state's two million residents, has responded by implementing cost-cutting measures and is exploring selling a jail and other real estate in Albuquerque to raise funds.
Treasurer Manny Ortiz also sold some bonds early, at a loss of about $750,000, to address cash-flow concerns. Through his lawyer, Mr. Ortiz has denied wrongdoing. The New Mexico Auditor's Office, one of several state agencies investigating the Bernalillo County Treasurer's Office, is asking independent auditors to examine the county's investment transactions since 2010.
In a letter to county officials last month, State Auditor Hector Balderas said the audit would examine whether payments received by the county's investment brokers met "best practices," whether the county frequently used the same brokers to buy and sell securities, and how it calculated the county's cash-flow needs.
County officials, who have welcomed the state review of the treasurer's actions, said there were no extraordinary expenses that created the cash-flow concerns. They said they became alarmed as the cash on hand in their investment portfolio gradually declined, falling below $10 million in 2013, compared with a historical average in excess of $30 million.
The treasurer's office had put the majority of the county's money in long-term bonds that don't mature for years, prompting fears the county wouldn't have enough cash to cover expenses and that it is overly exposed to rising interest rates, which cause bonds to decline in value. Officials estimate the county's remaining bond portfolio lost $17 million in market value as of Feb. 1...
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