By Rob Cone-Clark
Turnagain Times
Whittier Correspondent
After a criminal investigation, a lengthy forensic audit and emergency austerity measures, The City of Whittier has narrowly escaped insolvency. The 2007 balanced budget reflects two years of efforts and has allowed the City to remain functional and to continue pursuing several ambitious development projects.
When the current City Manager Mark Earnest came aboard near the end of 2005, he found himself at the helm of a sinking ship. Whittier’s Finance Officer, Don Grande, had been fired amid accusation of embezzlement. He left behind an accounting rife with irregularities and would eventually be convicted of stealing nearly $20,000 from city coffers.
As of Dec. 31, 2005, the City’s General Fund had a cumulative a deficit in excess of $407,000 and owed other City funds more than $655,000. Combined, this equated to as much as the entire projected General Fund revenue in 2007 of $1.2 million. Left unchecked, Whittier would likely have incurred a General Fund deficit of an additional $425,000 in 2006, putting the accumulated deficit over $1 million and bankruptcy for the City.
Whittier secured the services of Finance Officer Michelle Williamson whose monthly financials started revealing actual revenues and the magnitude of the problem became increasingly clear. By late July, 2006 Whittier was faced with the difficult task of reducing overall expenditures by about 25 percent. This was accomplished by a mid-year budget amendment, layoffs, a hiring freeze, and an austerity program for all expenditures.
Whittier cut in half positions financed from the general fund to seven-and-a-half employees. The Police Department lost four positions, the volunteer Fire Department lost its paid chief, and Public Works lost a mechanic and a building maintenance hand.
The City then went to the voters. At five mills, Whittier has the lowest property tax rate of any municipality in the state. In two separate special elections residents narrowly defeated ballot measures to raise rates.
Without new revenues City Manager Mark Earnest says that 2007 will continue to be a very lean year.
“We’re still operating with a skeleton staff,” he said. “It’s resulted in Directors working long hours and weekends, and improvements to the city’s infrastructure have to be deferred. Right now, we’re not able to put away any money, and climb out of our deficit or repay borrowed money from other enterprise funds. So, we’re not addressing the debt, we’re kind of breaking even right now; we’re not adding to the debt, which is a good thing. We’ve plugged the leak, so we’re not sinking. But we need to become stronger and repay the monies that have been borrowed from other funds.”
The latest budget reduces General Fund expenditures by 45 percent, Earnest says. He says the city has a marginal ability to provide adequate levels of basic public services while pursuing many of the priorities established in the City’s 2005 Comprehensive Plan.