California: Fiscal Audit of Cities

Cal Matters has an article up about an audit that was conducted by State Auditor Elaine Howle. The audit was done to determine the level of fiscal risk for California cities. The audit looked at various factors:

Cash position/liquidity
Debt Burden
Financial Reserves
Revenue Trends
Retirement Obligations

The cities were ranked as red, yellow or green -- which is worst and which is best is self-explanatory.

Eighteen cities ranked as red. The 2 that shocked me the most were Monrovia (10th) and West Covina (17th). I recently did a blog post about the budget issues in Montebello. That city ranks 31st and was listed as yellow.



There are actually 217 cities that were given green. I suppose those are cities one should consider moving to as those might indicate the cities that are least likely to have to increase taxes in the near future. Cities around Los Angeles included Santa Monica, Beverly Hills and West Hollywood. Those are relatively expensive cities, but there were some east side cities on the list; including La Puente, Monterey Park, Pico Rivera, Rosemead, South Gate and Temple City.

The one thing that I didn't come across is the scenario that was used to determine red, yellow or green. Was it based on the current economic environment or was it stress tested for a recession scenario. Cal Matters did have this quote:

“Right now, we’re in strong economic times but everyone is expecting that recession to hit,” Howle said. “So hopefully this information will trigger discussions and decision-making that better prepares cities to be able to respond without cutting services.”

Does this indicate that the current economic times were used to determine if a city is red, yellow or green?

Also up on Cal Matters I saw article on PG&E and the blame that Governor Newsom is throwing their way for the fires that ravage Northern California. I have to say I'm interested in an analysis of the interaction between PG&E and California's Public Utilities Commission. That might provide some needed balance in the blame game.