Auditor Examining Use of State Economic Development Funds Given to Industry for New Job Creation

Efficacy of Some ‘Economic Development’ Subsidies to Companies Questioned.

On April 28, 2023, New Mexico State Senate Finance Committee Chairman, George Muñoz Auditor wrote to State Auditor Joseph Maestas asking for an audit of programs the Governor’s economic development team uses to subsidize companies in the tens of millions of dollars. In his letter, Muñoz suggested Maestas’ team audit projects “to determine consistency in implementation by the Economic Development Department, and to potentially identify any fraudulent behaviors exhibited by the beneficiaries of those programs through their reporting methods on ‘job creation’ in order to qualify for those awards.”

(A copy of the full letter from Muñoz to Maestas can be found at the end of this story.)

Muñoz’s letter also referenced the Legislative Finance Committee (LFC) November 2022 report titled, “Program Evalution: Impacts of Past Local Economic Development Act and Job Incentive Training Program Investments.”

The LFC reported the need for more transparency and stronger regulatory guardrails to ensure sound investment of public funds in the Local Economic Development Act (LEDA) and the Job Training Incentive Program (JTIP) run by the Economic Development Department.

It also found that “the state does not monitor the actual impacts of JTIP and LEDA, hampering economic development decision-making.”

The Candle reached out to the State Auditor and requested an update related to Senator Muñoz’s letter seeking an audit of the programs.

On Friday, the following statement was received from Christopher Hall, Assistant General Counsel, NM Office of the State Auditor:

“In 2022, a New Mexico Legislative Finance Committee program evaluation raised concerns about state investments in Local Economic Development Act (LEDA) and Job Incentive Training Program (JTIP) projects. Subsequently, the Office of the State Auditor was also asked by the Senate Finance Committee to examine program and project implementation of LEDA and JTIP by the New Mexico Economic Development Department (NMEDD) and the various local governments managing the projects.

“Based on these concerns, the Office of the State Auditor decided to conduct an examination beginning in fiscal year 2023, looking at the programs from both ends. The scope of the evaluation covers both NMEDD’s implementation of the programs and looking at a sampling of the projects and how local public bodies have conducted their efforts as fiscal agents for the projects. The objective of the examinations is to scrutinize proper program implementation as well as to look for potential fraud, particularly around the reporting of job creation, in order to help the legislature identify opportunities to improve these programs.

“These examinations are ongoing, and further examinations may occur based on additional information received regarding certain LEDA projects not included in the initial examinations. My office cannot disclose specifics regarding this effort but will provide the results once it is completed.” (Emphasis added.)

(The Candle will be sharing documents received from the Inspection of Public Records requests with the special audit unit in Maestas’s office.)

Last week, The Candle published the first installment in a multiple part series on the way the state’s economic development programs have been used by the Lujan Grisham administration, including for beneficiaries such as New Mexico Fresh Foods (partly owned and run by Kelly Egolf, the wife of former Speaker Brian Egolf).

In July of 2022, acting on a tip from an inside source at a state agency, The Candle sent an Inspection of Public Records Act request to the New Mexico Economic Development Department (also forwarded to the Office of the Governor) for a copy of all documents related to New Mexico Fresh Foods.

The Candle learned of rumors that New Mexico Fresh Foods was receiving special treatment by officials in the state’s major economic development agency.

The first installment can be linked to by clicking the following headline: Economic Development Secretary’s Emails Reveal Governor Michelle Lujan Grisham as Key Decision Maker in Egolf Company’s $750,000 LEDA Grant

Look for the upcoming story regarding the overt efforts of the Governor’s Office and the Economic Development Department to not inform legislators and state employees of the LEDA award of $750,000 to the Egolf controlled New Mexico Fresh Foods.

And, later this week, The Candle reviews public funds funneled to energy and development companies through the efforts of the Greater Gallup Economic Development Corporation, which is run by State Representative Patty Lundstrom, the former Chairperson of the House Appropriations and Finance Committee.

Other companies that have received millions of so-called economic incentive investments from the state, and which The Candle will be reporting about, include film companies Governor Lujan Grisham has described as ‘partners’ of the state in growing the film industry.

New Mexico George K. Muñoz (D), and Chair of the Senate Finance Committee Wrote to New Mexico State Auditor Joseph Maestas asking for audits of Economic Development Program :