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SANTA FE, N.M. (AP) — 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 legislative audit released Thursday.
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.
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, 17 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 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 said the fair didn't appear to be 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.