Following last month's release of an audit of Albuquerque's Community Development Block Grant program, the US Department of Housing and Urban Development's Office of Inspector General is saying the city might have to pay back nearly $3 million in grant funds. The city’s CDBG program is administered by the Department of Family and Community Services. The CDBG program provides communities with extra resources to address unique community development needs. According to the audit, which covered the years between 2013 and 2015, those in charge of Albuquerque's program “did not have the capacity to implement an effective grant administration.” The audit found that the city had contracted with a higher bidder on at least one occasion, passing over significantly lower bids. It also discovered that the city used nearly $573,000 in CDBG funds to purchase a building that was not used exclusively for CDBG activities. Two conflicts of interest were also uncovered by auditors that weren't properly documented by the city. The first was the employment of City Councilor Klarissa Peña as vice president of communications and government relations for Youth Development Inc., a contractor that received CDBG funds. The other case involved a failure by Family and Community Services Director Douglas Chaplin to disclose that a board member of the developer who was awarded a contract to redevelop a city site with CDBG-Recovery Act funds was his brother-in-law. The report found $1.83 million in ineligible costs it says must be repaid and an additional $1.1 million if the city is unable to provide required documentation. The city is contesting $1.1 million of that. The OIG is asking that the local HUD office extend the city’s designation as a “high risk grantee for an additional year to allow the city the opportunity to continue administering its CDBG program to Albuquerque residents.” The local HUD office has six months to respond.
Audit Might Cause City to Repay Grants
State Lawmakers Request Corporate Tax Report
One of the largest professional services firms in the world was hired last month to evaluate the state's system of gross receipts and personal income taxes. Ernst & Young signed a $400,000 contract with New Mexico to study the current tax code and develop a new model of the state's economy that will allow lawmakers to know beforehand how changing the tax codes affects revenues. The primary data for the report will be personal and corporate gross receipts and income taxes. But last week, a panel of legislative leaders approved adding an additional $30,000 to the fee if the consulting firm is willing to analyze corporate income taxes in the study as well. Although no specific policy changes in regards to corporate income tax were discussed at the meeting, some legislative members felt that the data is needed if the report is to be comprehensive. New Mexico reduced corporate income tax rates in 2013 as part of a package of tax cuts which called for the state’s top corporate income tax rate to drop from 7.6 percent to 5.9 percent over five years. The Legislative Council voted overwhelmingly last week to authorize the extra $30,000. It's unclear whether the firm will accept the new terms. Ernst & Young's final report is expected in December.