Auditor: State’s 12 largest cities all at financial risk

Oakland has the worst finances of any large California city, according to the state auditor’s office. (Image: Wikimedia)

According to a new website run by California State Auditor Elaine Howle and her staff, the dozen most populated cities in California all have significant fiscal problems and will be forced into major adjustments in coming years.

Eleven of the cities – Los Angeles, San Diego, San Jose, San Francisco, Fresno, Sacramento, Long Beach, Bakersfield, Anaheim, Santa Ana and Riverside – face what Howle classified as moderate risk. One – Oakland – was seen as a high risk.

All 12 of the cities face considerable stress from the rising cost of pensions. Several – especially Los Angeles – also have vast unfunded health care obligations for their retirees. 

Howle’s findings were depicted as surprising in a Sacramento Bee analysis, which focused on the health of the state economy and the low unemployment rate. But government finance experts have long warned that California’s cities – which have seen the cost of post-employment benefits roughly triple over the last 30 years – are in a far worse position to deal with pension bills that the state and counties. That’s because total employee compensation takes up a much bigger chunk of city budgets.

Howle warns cities to prepare for recession

At a news conference introducing the website, Howle said a primary goal was making sure that both local officials and residents of each city would use her office’s analysis to prepare for a possible economic downturn. Even a mild recession is likely to reduce revenue that cities get from sales and hotel taxes and from development permitting.

“If some of these [cities’] costs continue to go up and these cities aren’t prepared for them, they will have to cut services in order to pay pensions, to pay for benefits, to pay for the debts that some of the cities have taken on,” Howle said, according to the Sacramento Bee. She specifically said nearly half the cities will struggle to meet their steadily increasing payments to CalPERS.

Rankings on the website are based on the 2016-17 fiscal year, with a focus on each city’s pension obligations, pension funding, pension costs, anticipated future pension costs, retiree health care expenses, debt burden, liquidity, general fund reserves and revenue trends.

Overall, 18 cities were said to be at high risk overall, 236 at moderate risk and 217 cities at low risk. Compton – which has not produced an audited overview of its finances in five years – was judged to be in the worst shape, followed by Atwater and Blythe. 

The other cities listed at being high-risk: Lindsay, Calexico, San Fernando, El Cerrito, San Gabriel, Maywood, Monrovia, Vernon, Richmond, Ione, Del Ray Oaks, Maryville, West Covina and La Habra.

Among the cities found to be in the best shape: Rancho Cucamonga, Chino Hills, Poway, Indian Wells, Rancho Mirage, La Quinta and Mountain View.

The fact that 2-year-old information was being presented by the auditor as a snapshot of cities’ current fiscal health prompted criticism from the League of California Cities.

“It doesn’t tell the story of now, and so we’re not really clear on how helpful this dashboard is to the public, to the cities or basically anybody,” Jill Oviatt, director of communications and marketing for the league, told the Bee. She likened Howle’s rankings to “a data dump that’s void of context and analysis.”

8 comments

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  1. Ulysses Uhaul
    Ulysses Uhaul 29 October, 2019, 16:51

    Great advertising for pushing doomers down the pot holed freeway to our travel trailer moving lot. Love the articles….keep them coming….

    Reply this comment
    • Ebolan
      Ebolan 30 October, 2019, 15:22

      It’s enough to make you want to be a swabbie in Queeg’s navy so you can sail away from this madness.

      You got any pack-n-ship deals for the rest of us?

      Reply this comment
      • Queeg
        Queeg 31 October, 2019, 09:46

        Who needs specials.

        Business is brisk. But. We could throw in a antique Korean War era Falstaff aluminum bottle opener with every extendo-trailer cross country deal.

        You can’t believe how popular Vicious is with doomers. We gave away 167 paw autographed pictures of this highly social pup.

        You are shielded from Desert Storm-type winds in our buttressed fire proof comfort bunker while enjoying a vita-rich guava icee with a dab of organic mint leaves…… A sprinkle of Sir Lanka turmeric on request too…

        Reply this comment
  2. Standing Fast
    Standing Fast 30 October, 2019, 17:55

    Some of the cities listed as “moderate risk” should be reviewed more closely. I suggest the analysts check out the State Controller’s Office Annual Reports on Cities and take a look at the bottom lines in the very last Table–total revenue, total expenditures, total indebtedness.

    Reply this comment
    • Joe
      Joe 31 October, 2019, 19:50

      Could you provide a link to the annual reports and that table you mention? Thank you.

      Reply this comment
      • Standing Fast
        Standing Fast 1 November, 2019, 16:46

        http://www.sco.ca.gov

        Financial reports
        Cities & Counties
        Cities
        Fiscal Year

        Follow prompts. You can also call the State Controller’s Office for help getting started. Telephone number posted on the site.

        Reply this comment
        • Joe
          Joe 1 November, 2019, 18:30

          Sorry, I can’t find it.

          I don’t see a Financial reports link but do see a Financial Reports, Taxes and Economy link and if I click on it the page that displays has no Cities & Counties link.

          Can you provide clarification or correction?

          Thank you.

          Reply this comment
  3. T TTT Ted Steele, Mentor
    T TTT Ted Steele, Mentor 30 October, 2019, 21:51

    Trump pseudo economic doomera dogma bites chamber of commerce morons in the ass, film at 11!!!

    Reply this comment

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Chris Reed

Chris Reed

Chris Reed is a regular contributor to Cal Watchdog. Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. From 1990 to 1998, Reed was an editor, metro columnist and film critic at the Inland Valley Daily Bulletin in Ontario. Reed has a political science degree from the University of Hawaii (Hilo campus), where he edited the student newspaper, the Vulcan News, his senior year. He is on Twitter: @chrisreed99.

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