Copyright © 2014 Albuquerque Journal
Bernalillo County will run out of money to pay its bills by late summer if it doesn’t borrow money or sell investments, possibly at a loss, according to County Manager Tom Zdunek.
“We’ll be out of cash in August unless we do something,” he said Tuesday in an interview.
His comments came after he briefed the County Commission during a special meeting called to consider a new investment policy.
Zdunek told commissioners that his staff is evaluating different borrowing options, including a line of credit. There’s also the possibility of selling off $40 million to $50 million in investments, though that would take approval from County Treasurer Manny Ortiz.
Investments might have to be sold at a loss because the county’s investment portfolio has lost about $18 million in value.
Doug Brown, a former state treasurer and now the dean of the business school at the University of New Mexico, urged the commission and treasurer to take quick action to address the $18 million loss in portfolio value.
“It could be several times more than that if interest rates were to spike,” he said.
The commission moved quickly Tuesday to adopt a new investment policy crafted with help from Brown and other experts across the state. It won unanimous, bipartisan support from the commission.
But one key approval is still missing: Ortiz said he doesn’t entirely agree with the policy.
The policy can’t go into effect in its entirety without the treasurer’s approval. But it could serve as guidance for what kinds of investments Ortiz can make with commission approval. Ortiz said he’d like to meet to discuss the policy further and believes an agreement could be reached in about two weeks.
However, he frustrated commissioners on Tuesday when he had trouble explaining specific objections to the policy. Instead, Ortiz insisted that he agreed with “95 percent” of the policy.
Commissioners asked over and over for Ortiz to detail what needed changing to win his approval.
“I, for one, am very tired of batting this around,” Commissioner Wayne Johnson said at one point. “I’ve had it with this. We need to move forward … and start pulling ourselves out of this mess.”
Ortiz said there was conflicting language in the policy.
“You give me the authority in one hand and take it away in the other sentence,” Ortiz said. “Today I’m not ready to sign off on this until we can meet … to discuss those minor changes.”
He read to the commission from a court decision outlining that neither the treasurer nor commission has sole policy-making authority over investments.
Ortiz also delivered a three-page letter to the commission in which he said the policy “proposes to minimize and/or alter the statutory authority which is vested in every county treasurer” in New Mexico.
The back-and-forth comes as the county struggles with the dropping value of its investment portfolio. The county administration says too much of the county’s money is tied up in long-term investments and unavailable to pay bills.
Tuesday’s investment policy was largely crafted by a seven-member subcommittee that included representatives from city government, the state and county treasurer’s offices, state Department of Finance and Administration, county Legal Department and the banking industry.
The new policy calls for the County Commission and treasurer jointly to appoint an investment officer and to agree on which brokers are allowed to do business with the county. There would be requirements for how much cash must be available on short notice.
The policy also calls for the county, by July 1, to start using “electronic trading platforms” for investment transactions to ensure transparency.
“It would take actual purchase decisions about securities into an open market,” said Lou Hoffman, Albuquerque’s finance director and chairman of the subcommittee. “It would get the personal relationships out of the trading process.”