Audit finds city may have violated law with water deal

A special audit of the city of Jal found government officials in the southeastern New Mexico oil patch town gave “improper billings and adjustments” of more than $660,000 between 2008 and 2016. Those billings may violate New Mexico’s anti-donation clause, State Auditor Tim Keller concluded, which bars local and state governments from making donations to private individuals. The audit comes after NM Political Report and the Jal Record reported last September that city officials gave a local rancher a $1.2 million discount on commercial water use between August 2012 and April of 2014. At the same time, the city raised water rates on other customers. Jal officials also continued selling industrial water to the the Beckham Ranch, Inc., for six months after a ban on industrial water sales went into effect.

State auditor opens special audit on Jal water issues

State Auditor Tim Keller recently designated the City of Jal for a special audit on the city’s water billing issues. The move comes two months after Keller’s office opened a case into an arrangement where the city in the southeastern New Mexico oil patch gave a local ranch a discount on utility water worth $1.2 million over a 25-month period between 2012 and 2014. NM Political Report, in partnership with the Jal Record, first reported on the city’s water deal with the Beckham Ranch in September. Related: State Auditor to investigate Jal water deal

In a Dec. 2 letter to Jal Mayor Cheryl Chance*, Keller writes the special audit will look at Jal’s “compliance with applicable laws, regulations, policies and and procedures with respect to water utility billing practices.”

Jal City Manager Bob Gallagher told NM Political Report that he is “extremely pleased” with the state auditor’s decision for the special audit and said he has been cooperating with Keller’s office on the matter for the past two months.

City gave ranch million-dollar water discount, documents show

This story was reported in partnership with the Jal Record, a weekly newspaper based in southeastern New Mexico. JAL—Like many areas in New Mexico, water is in short supply in this southeastern oil patch town of 2,500 people. In the past few years, city officials have tried to address the matter by limiting water use, including barring businesses from buying city water for industrial use in the summer of 2013. But between 2012 and 2014, the city gave one ranch an unusual perk—a more than $1 million discount on its water bills. On top of this, Jal continued to sell industrial water to Beckham Ranch, Inc. for six months after the ban went into effect.