With the state wracked by successive corruption scandals involving top officials, several lawmakers seem to agree that this is the year for ethics reform in New Mexico. A committee of the state House of Representatives gave a boost to those hopes Thursday by advancing a bipartisan proposal to establish an independent ethics commission through a constitutional amendment. The commission would have the power to investigate complaints of misconduct by public officials, candidates, lobbyists and contractors. The complaints would be public, and the commission’s opinions could be appealed to the state courts. Campaign finance reform advocates and good government groups have fought for years to create such a body.
A year and a half after a preliminary probe from the State Auditor’s office concluded that Demesia Padilla used her state position to benefit her former private client, the Taxation and Revenue Department secretary resigned from office this month after nearly six years on the job. The revelations of an ongoing investigation by Attorney General Hector Balderas revealed far more potential misconduct from Padilla. Previously: Top ten stories of 2016: 10-6; #5: NM Dems buck national trend, retake House
First, TRD employees interviewed corroborated previous reports and evidence that Padilla, as head of the department that taxes New Mexicans, did insert herself into the audit of a company she previously did accounting work for. But a search warrant affidavit filed by Attorney General Special Agent Ed Griego revealed that Padilla may have also embezzled money from the client, Harold’s Grading and Trucking—more than $25,000 in all. Padilla told investigators that this money, which was transferred directly to her personal banking account between 2011 and 2013, was owed to her by Harold’s Trucking from previous work.
The highest-ranking official at the state Taxation and Revenue Department became somewhat reflective Tuesday over last week’s sudden resignation of his former boss, Demesia Padilla. At an annual state legislative conference hosted by the New Mexico Tax Research Institute, the department’s Deputy Secretary John Monforte said he’s known Padilla for 10 years and came to the department when she was appointed by Gov. Susana Martinez. Padilla resigned as secretary last week after an agent for Attorney General Hector Balderas filed a search warrant affidavit on her home. Monforte is now heading the department. The affidavit described an ongoing investigation that points to possible tax evasion and alleged embezzlement of money from a business she once did accounting work for, including while she was TRD secretary.
The Attorney General’s office filed a search warrant for the house of Demesia Padilla. Padilla then resigned from her position as Taxation and Revenue Department Secretary. Here are some of the key parts of the search warrant that NM Political Report obtained yesterday. Padilla was doing work for Harold’s Grading & Trucking through Feb. 2013.
Part of the search warrant that resulted in the resignation of Taxation and Revenue Department Secretary Demesia Padilla mentioned her alleged abuse of power in a case referred by the State Auditor. Here are the stories NM Political Report wrote about this from last year. Auditor finds possible abuse of power in Tax and Rev: Allegations revealed by the state Auditor found that (at the time) unnamed top officials in TRD could have given improper preferential treatment to a taxpayer in New Mexico. State Auditor Tim Keller referred the investigation to Attorney General Hector Balderas. A spokesman for TRD said the letter from Keller was political and, “We believe these are nothing more than unsubstantiated claims that are being driven by disgruntled former employees, who either work for the State Auditor or were fired for sexual harassment, and now they have an ax to grind.” TRD secretary named in investigation: A letter to Gov. Susana Martinez from State Auditor Tim Keller revealed the allegations of abuse of power surrounded Taxation and Revenue Department Secretary Demesia Padilla.
State Taxation and Revenue Department Secretary Demesia Padilla resigned from her position today, according to media reports. Padilla’s resignation came after New Mexico Attorney General Hector Balderas filed a search warrant on her house related to an investigation into allegedly aiding an ex-client by using her position as TRD head. Padilla worked as a certified public accountant before Gov. Susana Martinez appointed her to the helm of TRD in 2011. Related: The key parts of the Demesia Padilla search warrant
The search warrant sought Padilla’s personal and business income tax returns from 2011-2013, among other information, stemming from an anonymous referral sent to the Attorney General’s Office in July 2015 “alleging illegal and financially questionable acts” as well as a referral from State Auditor Tim Keller. The warrant also sought tax records from Jessie Medina Jr. According to the New Mexico Secretary of State’s Office, Jessie Medina was listed as an officer of Padilla’s private accounting firm.
The latest update on the state’s budget situation was filled with negative news, including a large reduction from previous budget projections released in August. The current year’s budget is projected to be $69 million in the hole. For the fiscal year starting July 1, 2017, state budget experts project $300 million less money to spend than the budget in the current fiscal year—which itself saw massive cuts during the special session, with 5.5 percent cuts to most agencies. The update, presented by experts from the Department of Finance and Administration and the Taxation and Revenue Department Monday morning to the Legislative Finance Council, comes a month and a half before legislators go back to work during a regular legislative session to deal with next year’s state budget. During a special session in September and October, the Legislature plugged a $600 million budget deficit that encompassed last year’s budget and the current budget through a combination of tapping into reserves and making cuts.
A House committee voted Saturday night to reject a bill that would delay a corporate tax cut for two years. The corporate tax delay, which narrowly passed the Senate the night before as part of a wider budget package, would have saved nearly $13 million in the current fiscal year and more in the next fiscal year according to analysis by the Legislative Finance Committee. The Taxation and Revenue Department, part of Gov. Susana Martinez’s administration, estimated it would save much less, saying it would be $5 million in the current fiscal year and again less than the LFC predicted in the next. “We are not asking for a tax increase,” Rep. Bill McCamley, the Las Cruces Democrat who carried the bill on the House side, said. “We are merely asking that we delay this tax.
The Senate Finance Committee went to work Friday to bridge the gap on the large budget deficits in both the current fiscal year and the recently completed fiscal year. The proposals to close the deficits came from expanding medical marijuana, taxing some internet sales and accelerating the phasing out of the hold-harmless provision for local governments. “If it looks like chaos, that’s what it is,” Senate Finance Committee chair John Arthur Smith, D-Deming, joked at the start of the productive meeting. Another meeting for the bills was scheduled for later Friday evening, with Senate Majority Leader Michael Sanchez saying the full Senate would hear the bills later that night. The committee passed seven bills in all, sending all seven to the Senate floor.