Leveraging Local Gov.s Buying Power: NEW MEXICOS ECONOMIC TRICKLE - PowerPoint PPT Presentation

NEW MEXICO STATE AUDITOR TIMOTHY KELLER State Auditor Leveraging Local Gov.’s Buying Power: NEW MEXICO’S ECONOMIC TRICKLE OUT

OFFICE OF THE STATE AUDITOR Combating Financial Fraud, Waste and Abuse GOVERNMENT ACCOUNTABILITY OFFICE (GAO) Financial Health Report Structural Job Killers • Money on the Sidelines Update • Our $$$ Leaving Our Economy • Swiss Cheese Tax Policy • Bait and Switch: The Dedicated Revenue Abuse NEW MEXICO STATE AUDITOR

NEW MEXICO GOVERNMENT AGENCIES Agency Type # Agency Type # State Agencies (exc. PED) 92 Housing Authorities* 45 Public Education Department 1 58 Regional Housing Authorities State-Chartered Charter Schools 3 • Municipalities* 107 Soil & Water Districts 48 Counties 33 Special Districts 57 Schools and School Districts 92 39 Mutual Domestic Water Association 213 District Charter Schools • Higher Education 17 23 Regional Educational Coops* 11 Component Units of Higher Ed. • District Attorneys 15 Workforce Dev. Boards 5 District Courts 14 Public Improvement Districts 11 Hospitals & Special Hospital Dist.* 9 Tax Increment Development Districts* 8 Councils of Governments* 7 Land Grants 31 Acequias and Ditches 27 Total Entities = 966 (*includes component units)

OUR TAX DOLLARS LEAVING OUR ECONOMY OUT OF STATE GOVERNMENT SPENDING OSA asked all audited agencies to self-report all contracts entered into during FY15 over $60,000, regardless of how they were procured. Initial data covers over $1.3 billion dollars in awarded contracts and over 3000 procurements • First of its kind to our knowledge • One year snapshot • Report coming this fall • Year over year comparison coming Spring 2017 NEW MEXICO STATE AUDITOR

OUR ECONOMIC DRAIN Out of State Government Spending NEW MEXICO ECONOMY -Payments for government purchases -Purchases by government vendors -Taxes from government vendors -Purchases by vendor employees -Taxes from vendor employees OUT OF STATE SPENDING

ECONOMIC IMPACT OF OUT OF STATE CONTRACTING Research indicates contract only $43 out of every $100 stays in the community from an out-of-state purchase.

ECONOMIC IMPACT OF IN STATE CONTRACTING In contast, for every $100 spent at a local business approximately $68 stays in the community.

STATEWIDE SPENDING (All industries) In State - All Other Industries, $759,746,612 , 33% State Agencies, $323,283,838 , 31% Municipalities, In State – Construction $235,745,011 , 23% Industry, $1,040,391,785, Schools, 45% $205,551,770 , 20% Higher Education, $94,186,375 , 9% Out of State - All Industries , $525,323,880 , 22% All Other Agency Types, $181,624,792 , 17% * DID NOT REPORT DATA TO MAKE IN-STATE DETERMINATION $219,930,546

TOTAL SPENDING OUT OF STATE By Industry (Excludes Construction) Percentage of Insurance & All Other IT Health & Medical Benefits Equipment Maintenance Food Services Corrections A/E Industries Legal Industry Spending 83% 77% 66% 48% 39% 24% 14% 30% 38% 3% Going Out of State Architecture Health and Food Services Insurance and Other IT Equipment Maintenance Corrections and Legal Medical Benefits Industries Engineering Amount Going Out of State $29,122,727 $109,546,516 $30,925,302 $102,301,177 $58,196,266 $12,467,503 $23,519,609 $15,596,356 $2,542,817 $104,078,665 Amount Staying In State $5,992,607 $32,430,642 $15,679,469 $109,105,866 $90,912,872 $29,303,485 $72,578,409 $98,424,571 $96,484,766 $166,349,157 Amount Going Out of State Amount Staying In State *DID NOT REPORT DATA TO MAKE IN-STATE DETERMINATION $161,994,663

WHO GETS OUR MONEY? Health and Medical Industry: $109,546,516 Out of State 84% going to Colorado and Tennessee NM PUBLIC MONEY Insurance/Benefits Industry: $102,301,177 Out of State 72% Going to Missouri Corrections Industry: $23,519,609 Out of State 87% Going to Tennessee Equipment Industry: $58,196,266 Out of State 27% Going to Texas Information Technologies Industry: $29,652,440 Out of State 21% Going to Missouri

TRICKLE OUT ABQ Metro By Entity OUT OF AGENCY OUT OF STATE STATE % IN STATE IN STATE % NO RESPONSE TOTAL Albuquerque Bernalillo County Water Utility Association $456,842 2% $22,157,396 94% $991,481 $23,605,719 Albuquerque Housing Authority 0% $817,366 100% $817,366 Albuquerque Metro Arroyo Flood Control Authority $394,258 3% $13,671,409 97% $14,065,667 Albuquerque Public Schools $9,123,868 17% $42,642,529 80% $1,620,000 $53,386,397 Bernalillo County $70,057,911 59% $48,072,117 41% $431,506 $118,561,534 Bernalillo County Metropolitan Court 0% 0% $4,779,880 $4,779,880 Central New Mexico Community College $1,271,352 4% $32,091,157 96% $33,362,509 City of Albuquerque $10,742,696 13% $73,708,359 87% $84,451,055 Second Judicial District Court $69,300 41% $100,000 59% $169,300 University of New Mexico $14,162,869 39% $22,266,494 61% $36,429,362 UNM Behavioral Operations $18,176,273 57% $12,816,916 41% $648,905 $31,642,094 UNM Hospital $13,823,042 45% $11,202,803 36% $5,747,339 $30,773,184 UNM Medical Group $952,990 100% 0% $952,990 UNM Sandoval Regional Medical Center $235,548 100% 0% $235,548 Village of Los Ranchos de Albuquerque 0% $369,027 $369,027 GRAND TOTAL $139,466,949 $279,915,572 $14,219,111 $433,601,632

ABQ METRO GOV SPENDING By Industry (Excludes Construction) Percentage of Insurance & Industry All Other Food Services Maintenance Corrections Health & Medical IT Equipment Telecom A/E Legal Benefits Industries Spending 100% 18% 4% 43% 98% 97% 93% 60% 32% 2% 1% Going Out of State Food Health & Insurance Other Corrections IT Equipment Telecom A/E Mainten. Legal Services Medical & Benefits Industries Amount Going Out of State $6,203,292 $9,155,303 $55,010,880 $12,532,058 $30,626,768 $3,822,923 $4,077,845 $189,869 $636,866 $107,817 $15,636,970. Amount Staying In State $0 $194,064 $1,696,603 $930,478 $20,202,646 $8,191,500 $18,281,200 $5,133,361 $24,912,000 $7,235,482 $20,665,888. *DID NOT REPORT DATA TO MAKE IN-STATE DETERMINATION $8,553,329

TRICKLE OUT Santa Fe Metro By Entity AGENCY OUT OF STATE OUT OF STATE % IN STATE IN STATE % NO RESPONSE TOTAL Santa Fe Public Schools $609,422 3% $22,068,157 97% $88,403 $22,765,982 Santa Fe County $7,714,194 60% $5,045,452 40% $12,759,646 City of Santa Fe $1,272,487 15% $6,983,161 85% $8,255,648 Santa Fe Solid Waste Management Agency $606,995 16% $3,208,793 84% $3,815,788 GRAND TOTAL $10,203,098 $37,305,563 $88,403 $47,597,064 *SANTA FE AREA INCLUDES: CITY OF SANTA FE, SANTA FE COUNTY, SANTA FE PUBLIC SCHOOLS, SANTA FE COMMUNITY COLLEGE, SANTA FE SOLID WASTE MANAGEMENT AGENCY, BUT SANTA FE COMMUNITY COLLEGE DATA FOR FY15 WAS NOT USABLE. THE OSA BELIEVES DATA GAPS EXIST FOR ALL OR MOST SANTA FE AGENCIES.

SANTA FE METRO TRICKLE OUT By Industry (Excludes Construction) Percentage of All Other Water Rights & Corrections Food Services Equipment Uniforms Environmental Maintenance Industries A/E Leasing Maintenance Industry Spending 100% 98% 62% 32% 5% 0% 0% 0% 31% 0% Going Out of State Water Architecture and All Other Corrections Food Services Uniforms Equipment Environmental Maintenance Maintenance and Lease Engineering Industries Rights Amount Going Out of State $1,200,000 $4,000,000 $1,401,560 $652,202 $60,000 $0 $0 $0 $0 $1,924,953 Amount Staying in State $0 $67,790 $841,651 $1,376,229 $1,219,141 $4,656,059 $1,797,497 $1,668,697 $900,500 $4,136,420 Amount Going Out of State Amount Staying in State *DATA FOR SANTA FE COMMUNITY COLLEGE WAS NOT USABLE. THE OSA COULD NOT MAKE AN IN-STATE DETERMINATION FOR THOSE CONTRACTS.

PROCUREMENT METHODS RESULTING IN OUT OF STATE SPENDING STATEWIDE OUT OF STATE REPORTED CONTRACT DOLLARS TYPE OF PROCUREMENT AWARDED % OF OUT OF STATE DOLLARS Competitive $ 310,192,183 59% Piggyback Contract $ 52,474,668 10% Emergency $ 45,167,307 9% Sole Source $ 42,835,843 8% Statewide Pricing Agreement $ 12,740,722 2% Exempt $ 11,034,922 2% Cooperative $ 9,817,112 2% Other $ 272,054 22% No response $ 40,713,610 8% * Concerns about underreporting of non-competitive procurements

ECONOMIC HEMORRHAGE THE GOOD: CONSTRUCTION, ARCHITECTURE AND ENGINEERING SPENDING IS OVERWHELMINGLY IN STATE THE BAD: HEALTH CARE, IT AND FOOD 91% of contract dollars awarded to SERVICE SPENDING IS PRIMARILY OUT OF in state vendors STATE 86% of reported contract dollars More than half of contract dollars awarded through competitive awarded to out of state vendors procurement THE UGLY: LITTLE TRANSPARENCY INTO 40% OF CONTRACT DOLLARS This represents a huge opportunity – $1.1 billion retained locally AWARDED hundreds of millions of dollars in If we deploy unspent funds into government spending that could capital projects, this will give a great potentially nurture expansion in these return on government spending COMPETITIVE PROCUREMENT industry sectors ACCOUNTS FOR ONLY 60%

WE CAN LEADERSHIP & INTENTIONALITY COMMIT TO 1. Deliberate action, not just words, ACTION to push past the concept and excuses, commit to a specific plan 2. Leaders, Mayors & Governors with Scarcity is a choice a clear command of the connection b/t government, health and economy that leaders allow 3. Politicians come and go, it’s the to happen community and anchor institutions that drive lasting change