Senate Bill 355 would codify oversight procedures that were established by a 2013 executive order concerning management and disbursement of capital outlay funds, creating a Public Finance Accountability Act that sets statutory criteria for releasing capital outlay and special appropriations tied to audit compliance.

Sen. Peter Wirth, sponsor of SB355, told the committee an attorney general opinion issued after the 2013 executive order had concluded the order was unconstitutional as written, and that the current practice gives the executive branch broad authority. “We need to do something in statute, and that's what this proposes to do, is to codify the oversight,” Wirth said.

Emily Oster, finance director for the City of Santa Fe, spoke in support and described work to catch up the city’s audits. Committee members asked about consequences and oversight when audit findings show material weaknesses or deficiencies. Wirth and staff said a grantee that documents a material weakness must prepare an actionable plan and would have two fiscal years to remedy those findings; if unremedied, a fiscal agent can be appointed to manage funds.

Committee deliberations: Sponsors said the statutory framework is intended to provide guardrails and a clear process for DFA (Department of Finance and Administration) and the state auditor when audits are missing or show deficiencies, and to give local governments a path to resolve findings rather than an indefinite freeze of funds based solely on executive discretion.

Vote: Senator Sherr moved a due-pass recommendation; Senator Jadimio seconded. The committee approved the due-pass motion by show of hands with no recorded opposition. Testimony included two in-room supporters and one online participant whose position was recorded as opposition.

Next steps: Sponsors said they expect continued discussions with DFA and the state auditor as the bill proceeds.