Treasurer: Deja View Again?

Between them, two men have cost BernCo taxpayers Millions

BY DENNIS DOMRZALSKI Patrick Padilla and Manny Ortiz could be New Mexico’s poster boys for bad government. Come June 7, the question is whether the public cares. Both are running for Bernalillo County Treasurer. Ortiz is the incumbent. Padilla had the job before him, then stepped down to work as Ortiz’s investment officer. In their interchangeable roles over the years, they wreaked havoc on the county’s investments, violated its investment policy and helped the county lose $27 million, which in turn led to a tax increase. In a report released in 2014, the state auditor slammed the two, saying they made $900 million in investments that were not in the public’s best interest, that they gave preferential treatment to some investment brokers and that Padilla probably broke laws. No charges have been filed against either man. In November 2013, the Bernalillo County Commission, in an attempt to express its frustration with Ortiz, unanimously approved a vote of “no confidence” in the treasurer. Not long after that, the county rewrote its investment policy and hired – at a cost to taxpayers – an outside firm to oversee Ortiz’s investments. And now, the U.S. Securities and Exchange Commission is investigating Padilla and Ortiz to see whether they improperly accepted gifts from brokers and violated the county’s code of ethics. In time, the SEC will release its findings. But on June 7, Bernalillo County voters will have a chance to tell the world whether they care about the bad government Padilla and Ortiz have given them and the tax increase they caused, or whether they just accept the abuse.

Does the public pay attention?

“It’s always interesting to speak to voters, and to, generally speaking, see how much they do pay attention to the issues of the day and controversies,” said Brian Sanderoff, president of the Albuquerque polling firm, Research & Polling Inc. “There are a lot of people who don’t take the time [to delve into issues, candidates and controversies]. However, oftentimes, they do ultimately figure it out,” Sanderoff said. In recent years, two ethically challenged state legislators – Ray Begay and Mary Jane Garcia, both Democrats – lost their seats to Republican opponents after news of their missteps broke, Sanderoff said, suggesting that voters do sometimes pay attention. A key to the treasurer’s race is who votes in Democratic primaries. In the recent past, turnout has hovered around 20 percent in county primaries. But Democratic primary voters are often older than 50 and are generally more educated and more informed than the average voter. And they “tend to read newspapers,” Sanderoff said. “That is the group of people who might be aware of the types of controversies we have seen in the media [regarding Padilla and Ortiz],” he added. “You’ve got the second challenge that voters face, and that is to go and do their homework and figure out which of the other two candidates they prefer,” he said. Also running for the Democratic nomination for treasurer are Chistopher J. Sanchez and Nancy Bearce. Sanchez has experience in banking and construction and has worked in the Bernalillo County Treasurer’s office for seven years. Bearce, an employee benefits administrator, has been active in neighborhood associations in Albuquerque’s International District and La Mesa neighborhood.

Costing you money

The homework on Padilla and Ortiz is easy. Padilla was treasurer from January 2005 through December 2012. During that time, Ortiz was his investment officer. After two four-year terms, Padilla couldn’t run again because of term limits, and Ortiz was elected treasurer and took office in January 2013. Padilla then became his investment officer. In their time together, Padilla and Ortiz put much of the county’s $270 million portfolio into long-term investments, some as long as 20 years. That’s improper for governments because they need money available to pay bills and meet payrolls. Bernalillo County, for instance, spends $25 million a month. At one point, because Ortiz and Padilla had tied up the county’s money in long-term investments, the county had trouble meeting its payroll. That’s when the investment scandal broke into the news. As a result, the county sold off its long-term investments, rewrote its investment policy and hired an outside firm to oversee Ortiz’s investments. To get the cash it needed, the county took a $17 million loss as well as a $10 million hit on lost interest income. Padilla has repeatedly claimed that he has done nothing wrong and that, in fact, he made the county millions of dollars in interest income over the years. Ortiz, who was the subject of a failed citizen recall effort, claims in a lawsuit that the County Commission conspired against him. The November 2014 audit by the State Auditor’s Office blasted both Padilla and Ortiz. “The County Treasurer’s Office has not established adequate procedures to determine its cash flow needs and did not make prudent investment decisions that maintained the liquidity necessary to meet the County’s daily cash requirement,” the audit said. Then-auditor Hector Balderas also blasted Padilla and Ortiz. “I am deeply concerned that public officials who are entrusted with the investment of public funds violated their fiduciary duties. These violations of law and clear abuses of taxpayer resources are unacceptable,” Balderas said.

Not the first time

In the early 1990s, during his first term as treasurer, Padilla was in the news for a similar scandal. Back then, he had also put the county’s money into long-term investments. In addition, he was accused of churning the county’s investment accounts, meaning he was making more trades than necessary that led to commissions paid to favored brokers. Padilla was charged with misuse of public funds. At trial, he was acquitted by a jury of all charges.    Voters apparently forgot all that when, in 2005, they elected him treasurer again. Sanderoff said the public has to be reminded continually of wrongdoings by public figures before it actually sinks in. “I think the public cares, but it’s a question of whether it has been in the news enough as to whether voters will remember [wrongdoings] when they walk into the voting booth,” Sanderoff said. “It takes a certain amount of frequency and redundancy to translate into consequences in the voting booth.” Dennis Domrzalski is an associate editor at ABQ Free Press. Reach him at dennis@freeabq.com.              

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