Committee endorses Public Finance Accountability Act to tie capital funding to audit compliance

House Bill 493, styled as the Public Finance Accountability Act, would codify an executive-order policy into statute to encourage financial compliance by public entities seeking state capital outlay and other public funding. The House committee issued a do-pass recommendation after debate and public comment.

Sponsor testimony framed the bill as a tool to improve fiscal accountability and to better ensure that capital outlay funds are spent by entities with sufficient financial controls. The bill would create a Public Finance Accountability Fund, set criteria for grants and oversight, and authorize DFA (Department of Finance and Administration) to take enforcement actions for entities that have late audits or significant deficiencies. The sponsor said the measure mirrors executive order policy used since 2013 and that making it law would encourage local compliance and reduce idle capital outlay balances.

Committee members supported accountability but raised concerns that codifying the policy could produce unintended consequences for smaller local governments that lack capacity. Representatives noted DFA had expressed operational concerns and that more clarity about funding for enforcement and alternatives to strict enforcement should be addressed. Representative Lujan asked whether the bill reduces the rigor of current practice; sponsors said the bill preserves DFA’s enforcement authority and provides options such as fiscal agents and corrective plans to allow entities to access funds while they remedy audit findings.

After discussion the committee moved the bill forward with a do-pass recommendation; committee members asked sponsors to work with DFA and stakeholders to refine language addressing small governments and implementation capacity.