Audit says NM Fair in the Red

SANTA FE, N.M. — Oct. 21, 2011 - The New Mexico State Fair is running in the red and doesn't have enough money to finance day-to-day operations, according to a new audit that prompted legislators on Thursday to question whether taxpayers should be subsidizing the fair.

Auditors for the Legislative Finance Committee said the fair has been losing money for years as revenues and fair attendance dropped, but it has continued to operate because it's not paying some debts. This year's fair ended last month.

The fair, also known as Expo New Mexico, owes $1.9 million to the General Services Department's Risk Management Division for insurance coverage going back to 2009.

"This de facto loan from another state agency has allowed the New Mexico State Fair to have enough cash to maintain solvency," the audit report said.

The fair lost about $5 million in the 2010 budget year, and losses have averaged $3.4 million since 2006. The fair is supposed to be self-supporting from money it generates at the annual fair and other events at the fairgrounds in Albuquerque. A casino and horse racing track, the Downs at Albuquerque, leases more than one-third of the 236-acre fairgrounds.

Several rural legislators said the fair no longer draws enough interest from across New Mexico to be considered a state fair.

"This is a regional fair. I'm sorry, but I believe it is. And I don't think the rest of the state should be required to pay for it," Rep. Dennis Kintigh, R-Roswell, told fair officials at an LFC hearing on the audit.

Auditors recommended possibly shortening the annual state fair from 17 days to 10 days. However, the fair was closed on Mondays and Tuesdays this year and in 2010. Several neighboring states have fairs that run for 10 days, including Oklahoma and Colorado.

In response to the audit, fair officials said they're trying to boost revenues but agreed the fair is financially insolvent. To help trim costs, 16 workers were laid off last month. That left 36 full-time employees.

"Difficult choices and challenges lay ahead, but we believe that none of them is insurmountable," Dan Mourning, the fair's interim general manager, said in a written statement.

He said the current fair management, which was put in place this year after Republican Gov. Susana Martinez took office, inherited the current financial woes. Auditors pointed out that a Legislative Finance Committee audit in 1996 raised similar concerns about the fair's finances and operations.

"The state fair has been a bailout by the Legislature for years and years and years," said Sen. John Arthur Smith, a Deming Democrat and committee chairman.

The fair has been without a chief financial officer since last year, but fair officials said a contract accountant was hired in August, and improved accounting controls have been implemented.

Auditors said the fair's lease with the Downs at Albuquerque "is fraught with problems" and it appeared the fair isn't getting a full payment.

Sen. Tim Keller, a committee member and Albuquerque Democrat, said it was irresponsible that the fair was rushing ahead with a possible 25-year lease extension for the track and casino. The Downs at Albuquerque and another group submitted proposals to the fair for a new multimillion-dollar casino at the fairgrounds.

Keller said the governor and the Legislature need to revamp how the fair is organized and operated.

"It's structurally a failure," said Keller.

The fair is governed by a seven-member commission, which is appointed by the governor and confirmed by the Senate.

David "Hossie" Sanchez, the commission chairman, said "the biggest problem all these years has been the commission" because it had too much power and commissioners in the past tried to micromanage day-to-day operations rather than just set policies.

The fair has been "a playground for commissioners to come in during the fair or whenever and do whatever they want," said Sanchez, who has served on the commission for three years.

Newly appointed Commissioner Charlotte Rode complained that she and other commissioners "have been kept in the dark" about the fair's financial problems and negotiations on a possible new lease for the Downs at Albuquerque.

"If you think you're subsidizing the State Fair, you're also subsidizing a multimillion dollar private industry, whose owners are making millions," said Rode, who has lived near the state fairgrounds for most of her life.
 

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