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State Auditor: Governments Spend Billions Out-Of-State

State Auditor: Governments Spend Billions Out-Of-State

Tim Keller's report says that more than $2 billion of government money left the state.

State and local governments in New Mexico could be doing more to ensure that more of the billions of dollars they spend in procurements each year go to local companies, State Auditor Tim Keller said Thursday.

In 2015 and 2016, state and local governments spent $6 billion in procurement contracts, but $2 billion of that went to out-of-state companies, according to Keller’s new report on state and local government contracting.

Keller said his report, which reviewed more than 6,000 contracts by state agencies, more than 300 municipalities, counties and school districts, offers a best practices guide for government agencies so they can try to spend more money in the state.

“While there are natural reasons for some out-of-state spending, this report shows a clear path for creating thousands of permanent jobs by providing these opportunities to local businesses and entrepreneurs; that also means creating more tax revenue for our state,” Keller said. “When agencies use the competitive bidding process, they are more likely to contract with local businesses. What it takes is directive leadership by executive government officials when it comes to contracting, to demonstrate real commitment to move the needle on challenges like these in our state’s economy.”

Keller’s report said that while more than $2 billion of government money left the state, 68 percent of contract dollars left the state. Here are some more of the report’s findings:

The industries with the highest percentage of out-of-state government spending are corrections at $224 million, information technology at $253 million, and food services at $100 million.

The construction industry saw the highest value of reported contracts, and reported $2 billion worth of contracts (95 percent) going to in-state vendors.

The education industry has potential for capturing dollars in state, with 55 percent of $169 million in contracts currently going out of state. Many educational expenses are related to the information technology sector.

State agencies contracted with New Mexico companies 62 percent of the time, compared to schools at 84 percent, municipalities at 88 percent, and counties at 60 percent.

Competitive bidding increases in-state contracting. Only 10 percent of emergency procurements and 34 percent of sole source procurements resulted in contracts with in-state vendors.

Keller’s report added: “When governments contract with New Mexico businesses, money flows directly into the local economy, helping to build tax revenue, create jobs, reduce the ecological impacts of transport, and increase food security.”

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Dennis Domrzalski is managing editor of ABQ Free Press. Reach him at dennis@freeabq.com.

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