Audit Finds Los Angeles
Fails to Collect Nearly Half of Its Debts.
Los Angeles City Controller Wendy Greuel reports that the city has failed to
collect at least $260 million a year for traffic tickets, ambulance
transportation and other services – an amount that accounts for approximately 47
percent of the money owed to the city.
The controller sampled
collections from several city agencies to arrive at the estimate. The percentage
of uncollected debt is down only 1 percent from three years ago, when a similar
audit was conducted.
Ms. Greuel said the
collection rate is "not acceptable," and added that part of the problem is the
amount of time it takes the city to process bills and request payment. "If it
takes six months to get a bill to someone, they are less likely to pay," she
A spokesman for the
Department of Transportation said traffic tickets often are paid late, but most
are paid eventually because people can't renew their vehicle registration if
they have outstanding tickets.
Councilman Paul Koretz said,
"Maybe it's time we held the department heads accountable and looked at their
overall budget to see if it should be cut unless they improve collections."
(Source: Los Angeles Daily News, July 1.)
Councilman Koretz's suggestion is a good one, and should be implemented. The
best way to force department heads to take the problem seriously is to cut their
funding until they make improvements. The audit three years ago has not resulted
in any improvement, and it's doubtful that this one will, either, unless
penalties are put in place for those who accept the status quo.
Santa Clara County
Supervisor Overspends Annual Office Budget by $87,500.
Scott Herhold, a columnist for the San Jose Mercury News, reports that
for the fiscal year that ends June 30, Santa Clara County Supervisor George
Shirakawa Jr. overspent his $1 million-plus office budget by $87,500, nearly 9
percent. Now, the supervisor is "asking for a bailout from the financially
pressed county's contingency fund," Mr. Herhold writes.
The columnist adds: "Let me
put this in the simplest possible terms. A guy that we've elected to supervise
the county's budget – to make decisions on hundreds of millions of dollars at a
crucial time – can't keep within a budget for himself and his nine staffers."
The supervisor, the only one
on the five-member board who had an overspending problem, said in a memo to his
colleagues that "this unfortunate overage was due to unforeseen employee benefit
costs." An aide said the office has two part-time employees who were intended to
be classified as contractors, but were classified as employees, which means they
qualified for benefits that had not been budgeted. (Source: San Jose Mercury
News, June 21.)
Cal-Tax recommendation: The
county should follow Mr. Herhold's suggested recommendations to take the money
out of the supervisor's next budget, and to require that he explain in a public
meeting how the fiscal mismanagement occurred.
County, Government Lobbyists Spent $1.1 Million to Lobby Other Government
The Orange County Register's OC Watchdog blog reports: "A tally of
lobbying expenditures for just eight local governments in Orange County shows
that $1.1 million was spent on government-to-government influence-peddling,
reports the Orange County Grand Jury in its ominously-titled 'Lobbying:
The Shadow Government.'"
The biggest spender
was the Orange County Transportation Authority, spending $336,000 on lobbyists.
In second was the county itself, spending $240,000. Other government agencies
spending big on lobbying included: the Orange County Water District, $120,000;
the Orange County Sanitation District, $110,000; the Municipal Water District of
Orange County, $80,000; the Orange County Fire Authority, $60,000; the Orange
County Employee Retirement System, $40,000; and the Orange County
The blog noted that
this spending is just the tip of the iceberg: "When you consider that just about
all of OC's governments – 34 cities, and 28 school districts, and 31 special
districts, and four community college districts – employ lobbyists, well, it's
clear we're talking about millions upon millions of dollars spent just so one
branch of government (that's supposed to be working for We The People) can ask
for something from another branch of government (that's also supposed to be
working for We The People)." (Source: Orange County Register's OC Watchdog
blog, June 10.)
recommendation: Government agencies at all levels should reduce or eliminate
lobbying expenses and redirect the money to programs that serve those in need.
Government officials are elected to represent the people in their districts, and
should be expected to be aware of their constituents' needs without being
lobbied by other elected officials.
Says Department of Water and Power Tried to Extort the City Council.
Los Angeles City
Controller Wendy Greuel released an audit June 10 blasting the Los Angeles
Department of Water and Power for claims the department made during a dispute
over whether it could afford to transfer $73.5 million to the city to help with
"I can say with 100
percent certainty that the DWP did have the $73.5 million available to transfer
to the City, and could have done so without putting itself in ANY financial
jeopardy," Controller Greuel said. "My audit lays out in detail that none of the
reasons given by the DWP for refusing to transfer the money are supported by
facts. As of April 1, the DWP's Power Revenue Fund had approximately $752
million dollars in it, more than enough money to transfer the $73.5 million to
The controller also
said the department did not need a controversial Energy Cost Adjustment Factor
increase to complete the revenue transfer, as it had claimed.
On April 5, the DWP
sent a letter to Controller Greuel giving five reasons why it "could not
transfer" the $73.5 million.
"It's hard to look
at these numbers and not say that the DWP was trying to extort the City Council
into passing its proposed ECAF increase," the controller said. "This audit is
clear, there needs to be greater transparency at the DWP. The insulated culture
and the lack of accountability in the Department must change. The DWP has lost
the trust of the public through this debacle and it will require dramatic steps
over the coming months and years to rebuild the confidence of the ratepayers."
(Source: Report from the Office of the Los Angeles City Controller, June 10.)
recommendation: While taking money from the Department of Water and Power in
order to address the city's general fund imbalance may or may not be a good
idea, the proposal should be decided based on sound data and reliable reports
from all government staffers. We applaud the city controller for looking into
the department's claims and speaking out strongly about the problems she
Audits Reveal Waste in
L.A. County Departments.
Auditors in Los Angeles
County recently released a report documenting 101 cases of fraud that occurred
from June through December of 2009. The cases were discovered after auditors
reviewed calls made to the county's fraud hotline. The hotline generates about
500 tips every six months.
Some of the findings:
An employee in the Department
of Public Social Services obtained personal and confidential information for 82
welfare recipients. The information was obtained during home visits to the
recipients and from the department's computer systems. The employee, Trang Dinh,
reportedly used the information to file fraudulent income tax returns and
refunds totaling $100,000.
Los Angeles County's Beaches
and Harbors and Library departments paid $842,000 for custodial and janitorial
services that were never performed. The departments had a contract with a phony
company. When the fraudulent contract was discovered, the owner of the
"maintenance company" was arrested and convicted of a felony. He has been
ordered him to pay back the county.
Three county Fire Department
officials played golf during work hours, but claimed a full work day on their
time card. One official went as far as to claim overtime. Two of the officials
were not disciplined. Previous employee regulations allowed employees to report
a full work day as long as the employee worked at least one hour.
Fire Department Deputy Chief
Helen Jo received a reprimand for hiring one of the county official's future
sons-in-law. According to the audit, Ed'ward Rhone was overpaid and received
more benefits that most new employees are entitled to. Since the audit was
performed, the employee was transferred to a more demanding position to justify
his pay. (Source: Los Angeles Times, May 27.)
Nearly $1 Million in
County Purchases Unaccounted for in Orange County.
A report by Orange County Auditor-Controller David Sundstrom reveals that county
staff can't account for nearly $1 million in items purchased with taxpayers'
money. The report said 60 big-ticket items – including a covered trailer, laser
printers and LCD projectors – cannot be accounted for.
Mr. Sundstrom said the
majority of the missing items are electronics that are so old that they are no
longer valuable. "That's true," the OC Watchdog blog said. "All but two
of the items are more than 6 years old: An enclosed trailer bought in January
2005 for $20,741.88 was reported missing to county supervisors on February 3,
2009, (and) a VHF radio transceiver, bought in October 2007 for $8,429.91 is
The most expensive item on
the list was a pharmacy dispensing machine purchased for more than $152,000 in
1999. An official in the county's Health Care Agency said the device was traded
in to the manufacturer. (Source: Orange County Register's OC Watchdog
blog, May 25.)
Cal-Tax recommendation: The
county needs to tighten up its recordkeeping and oversight. The list of missing
items includes many expensive items that are not easily misplaced, including a
$5,500 oven at the sheriff-coroner's office, a $95,000 film imagesetter at the
Department of Public Works, and a $12,600 steam generator at the Health Care
Agency. County officials should know whether the equipment was traded in, junked
or stolen, or else they won't be able to do an adequate job of safeguarding the
County Builds $23 Million
Pet Shelter, Then Ponders Closing the Facility.
The Sacramento Bee reports on one of the more remarkable examples of poor
long-range planning: "Six months after unveiling its $23 million shelter for
unwanted dogs and cats, Sacramento County is contemplating getting out of the
animal care business, a county executive acknowledged Thursday. The county has
dismissed its shelter director, Pat Claerbout, and on Thursday met with area
officials to discuss the possible consolidation of animal care services across
The county has faced deficits
for three consecutive years, and a county official said, "Unless we come up with
a different revenue stream, the current model (for sheltering abandoned animals)
is not sustainable."
"The gleaming new shelter on
Bradshaw Road opened to fanfare in October," The Bee reports. "It was
publicly financed, and the county inherited a $1.6 million annual bond
obligation on the building." (Source: The Sacramento Bee, May 28.)
Consolidating animal care services with city-run facilities sounds like a good
idea, and the county also should consider eliminating its fiscal planning staff,
since the taxpayers don't appear to be getting any benefit from their services.
In addition to building a pricy high-end animal shelter when keeping it open
should have been a foreseeable challenge, the county supervisors decided in
mid-2007 to spend $295,000 on a handful of sculptures to beautify the building.
The county needs to examine its priorities.
Audit Shows City of Los
Angeles Misplaced 45 Percent of Purchases.
A new audit reports that the city of Los Angeles, facing a budget deficit of
$222 million, has misplaced hundreds of purchased items worth a total of almost
$1 million. Auditors also found that the city spent taxpayer dollars on many
items that were unneeded and sat in storage.
Auditors could not locate 115
items (45 percent of the items purchased by the city), including a $60,000 video
camera purchased by the Los Angeles Information Technology Agency (ITA).
The audit also found that ITA
and the Los Angeles Recreation and Parks Department purchased 138 items that
were unneeded, including some that have remained in storage for more than seven
years. These items include refrigerators, stoves, a swimming pool heater, a deep
fryer, two televisions, nine microwaves, and several computers and printers. The
unused items in storage are worth $237,000. (Cal-Tax: Of course, a
seven-year-old computer isn't worth much now.)
City Controller Wendy Greuel
said: "With the city facing such a large budget deficit, it's essential that any
equipment that we are able to purchase is easily located if needed and utilized
immediately. It's critical that we keep tight controls on the city's scarce
resources. Unfortunately, we found in this case that no one was minding the
Ms. Greuel offered several
recommendations: departments should update their inventories at least once a
month when assets are disposed or transferred; departments should conduct
biennial physical inventories of all equipment, as required; guidelines should
be developed for departments to follow when conducting physical inventories of
the city's assets; departments should use purchased items by putting them into
service as soon as possible, and such items should not go into storage upon
being purchased; departments should develop policies to monitor and track assets
that cost less than $5,000 and are susceptible to theft or loss; and departments
should place identification tags on every asset owned by the city, to assist in
the inventory process. (Source: News release from Los Angeles City Controller,
Cal-Tax recommendation: Other
cities and counties should follow Controller Greuel's lead and review recent
purchases. It is critical that officials conduct oversight of taxpayer dollars,
especially in times of fiscal hardship. The audit included a number of
recommendations that all local governments should follow.
Auditor Finds More Than
$300,000 in Errors in City of Menifee.
An auditor reported this month that the city of Menifee (in Riverside County)
has a severe lack of internal financial controls that has left the city open to
potential fraud since it became a city in July 2008.
The city-commissioned auditor
reviewed six of the city's 31 contracts and took issue with more than $300,000
in billing errors caused by overbilling, backbilling, delayed billing, double
payments or unauthorized payments.
Councilman Scott Mann, who
had pushed for the audits, said, "When you consider the accounting firm only
reviewed six of the city's 31 contracts, the prudent man and the prudent
taxpayer would have to ask, 'Are there additional errors out there that we need
Among the auditor's findings:
An administrator was paid at
an hourly rate of $140 to $145, when $130 was the maximum allowed in a contract.
This resulted in a $16,500 overpayment in a 10-month period.
A subcontractor billed the
city for $27,171 for labor hours that had no corresponding timesheets.
The city manager who awarded
contracts was simultaneously serving as a manager of a subcontractor that
received contracts, and received bonuses based on the company's performance.
Contracts for $236,900 and
$56,600 were awarded without the required City Council approval.
City officials said they were
troubled by both the depth and the breadth of the oversight problems. (Source:
Riverside Press-Enterprise, April 16.)
Cal-Tax recommendation: It
goes without saying that the city's remaining contracts should be audited as
soon as possible. City officials reacted to the audit by indicating they will
institute real checks and balances to safeguard the taxpayers' money, and the
city's residents should hold their elected officials accountable to make sure
the needed reforms actually occur.
Tax Dollars for Job
Creation Instead Spent on Trips to the Boardwalk.
The San Francisco Chronicle reports: "Federal stimulus dollars intended
for job creation in Oakland were spent instead on trips to the Santa Cruz Beach
Boardwalk and a Concord water park, rent, church repairs, bus passes, salaries
and car allowances, according to a state review."
Oakland, which has a 17.7
percent unemployment rate, received $3 million last year for summer youth, adult
and dislocated worker programs. But more than $830,000 of the money received
under the American Recovery and Reinvestment Act from February to December 2009
was not properly accounted for or was misspent, according to the state Office of
the Inspector General.
In addition, state auditors
found that the city inflated the number of jobs created, claiming 35 when only
about six jobs were created with the stimulus dollars.
Laura Chick, the state
inspector general overseeing federal recovery dollars, found that stimulus funds
were passed down from a city agency, the Oakland Workforce Investment Board, to
a nonprofit, the Oakland Private Industry Council, which took control of the
money despite the fact that the group had no valid contract with the city from
July 2009 until earlier this month.
$2,806 given to the Spanish
Speaking Citizens Foundation for food and field trips to the Santa Cruz
boardwalk, Waterworld California and Washington Park in Alameda.
$5,415 given to the Alameda
County Youth Development program for staff salaries, benefits and bus passes.
$9,100 given to the Watkins
Memorial Church of God for salaries, maintenance and repairs, and rent.
Auditors had trouble tracking
money in part because the Industry Council drew stimulus funds based on
arbitrary estimates rather than actual expenditures, Ms. Chick's report said.
(Source: San Francisco Chronicle, April 21.)
Cal-Tax recommendation: The
federal government and the city should put some oversight measures in place, and
funds should not continue to go to agencies who have misused the tax dollars
they previously received.
San Diego Throws Away
$31,000 in Discounts.
An audit of San Diego city departments found that the program used to purchase
goods and services to meet emergency needs is inefficient and wasteful. City
Auditor Eduardo Luna said the program has a cumbersome process, a lack of timely
payment for invoices, and no requirement that departments set aside money to pay
for purchases before placing orders.
The auditor said vendors
offered the city nearly $53,000 in discounts if it paid invoices in a timely
manner, but a poor tracking system led to the city losing nearly $31,000 of
those discounts. (Source: San Diego Union-Tribune, March 31.)
Cal-Tax recommendation: The
city should take the auditor's advice, which is to eliminate the program and
replace it with one that is efficient and has effective controls.
Ban on Lawn-Watering
Blamed for Water Main Breaks in Los Angeles.
The Los Angeles Times reports: "A blue-ribbon panel of scientists said
(April 13) that the high-volume water main breaks that bedeviled Los Angeles
last summer and fall were caused in part by the city's restrictions on lawn
watering, and their findings could force the city to remake its strict water
In June, the city limited the
use of lawn sprinklers to Mondays and Thursdays. Officials said the restrictions
were successful, as in February, Los Angeles had its lowest recorded water use
in 31 years.
However, the fluctuations in
water pressure "accelerated the metal fatigue failures of aged and corroded
cast-iron pipes," the report found. From July through September 2009, the city
recorded 101 major breaks that flooded streets, damaged property and wasted
countless gallons of water. There were 42 such breaks in the entire year of 2008
and 49 in 2007.
The Times noted that
in one break, a water main under Coldwater Canyon Avenue in Studio City
exploded, "sending a 10-foot gusher of water and mud into the air." The paper
continued: "Homes and businesses were flooded. The street, a major thoroughfare
connecting the San Fernando Valley and the Westside, was closed for a week. Less
than 72 hours later, another main burst in Valley Village, creating a sinkhole
that swallowed half a firetruck that responded to the call."
Damages from just the Studio
City break have led to 108 legal claims against the city. (Source: Los
Angeles Times, April 13.)
Cal-Tax recommendation: Next
time, consult with the experts before passing restrictions. This
ill-designed effort will be costly for the city's taxpayers, who already have
watched water flow through the streets while their lawns turned brown.
Grand Jury Finds Big
Problems at Small Water Agency.
The Sacramento Bee reports: "Citing years of dysfunction, the Sacramento
County grand jury is pushing for an overhaul of the Rio Linda/Elverta Community
Water District. On Monday, the grand jury released the findings of its
investigation into the district, which serves 18 square miles in northern
Sacramento County. The investigation found that political squabbling, lawsuits
and wasted taxpayer money are crippling the district and threatening public
health and safety."
The grand jury report stated:
"The conduct of the board of directors has been deplorable. It has wasted
taxpayers' dollars at the same time that it has brought disrepute on the
District. … Since they have failed repeatedly in the past, there is no reason to
believe that they will be successful in the future. The only hope for the
District is that major changes are enforced."
The grand jury found numerous
problems, including low pressure, unsafe drinking water, questionable spending
and apparent conflicts of interest on the part of the board of directors.
For example, the grand jury
found that residents conservatively pay an extra $100 per year in insurance
premiums for single-family homes partly because of the fire hazard that low
water pressure poses.
Criticizing the agency's use
of tax dollars, the grand jury reported: "Currently the district only has six
employees and has never had more than ten employees; yet the District has spent
hundreds of thousands of dollars on labor negotiations and employee lawsuits."
(Source: The Sacramento Bee, April 6.)
Cal-Tax recommendation: Local
officials should get involved and fix the problems, and there should be more
oversight in the future.
UPDATE: Los Angeles
Supervisors' Slush Funds Aren't Illegal, County Prosecutors Say.
Los Angeles County prosecutors said April 6 that county supervisors did not
break the law when they spent millions of tax dollars on pet projects without a
public vote or public discussion.
The Los Angeles Times
reports: "The district attorney's inquiry began in response to a complaint
received last month after The Times detailed some of the $3.4 million per
year that each of the five supervisors receives to spend at his or her
Deputy District Attorney
David Demerjian, who oversees the district attorney's Public Integrity Division,
said: "I made a determination that there was statutory authority for the board
to adopt a budget. Within their legislative function, it is their right to
determine how the budget should be divided up."
Nor did the supervisors
violate the state's open meetings law, the prosecutors said, because supervisors
have delegated authority to the county's chief executive officer to make the
individual expenditures dictated by the supervisors. (Source: Los Angeles
Times, April 7.)
Cal-Tax recommendation: The
budget for the District Attorney's Office is set by the Board of Supervisors, so
there may have not been the same level of scrutiny applied as there would have
been if a truly independent entity examined the spending. If the spending is, in
fact, allowed by law, then the law should be changed immediately to ensure that
taxpayers' money cannot be spent without a public, recorded vote.
Los Angeles Supervisors'
Spending Is Under Investigation.
The Los Angeles Times,
which recently reported on Los Angeles County supervisors using $3.4 million
slush funds without any votes to authorize the spending, now reports that
prosecutors are examining whether the spending was a violation of the law.
Supervisors have been using
the money for parties, donations to local groups, drivers, and to buy places for
themselves in "who's who" books.
The head deputy district
attorney said he has assigned two prosecutors to look into the spending. "One is
reviewing whether supervisors violated the state's open meeting law by spending
the funds without a public vote," the Times reported. "The second is
examining whether supervisors had the legal authority to spend the money."
The newspaper also reported
that supervisors used to vote on donations, "until the 1990s, when the
contributions dropped off the public meeting agendas apparently without
included $25,000 by Supervisor Mark Ridley-Thomas to pay for a reception for a
for-profit exhibit organized by a long-time friend, television and radio host
Tavis Smiley. (Source: Los Angeles Times, March 19.)
(Cal-Tax recommendation: This
investigation is good news to Los Angeles taxpayers, who deserve to know where
their tax dollars are going.)
Despite Massive Deficit,
Santa Barbara County Spends Big on Remodeling Offices and More.
The Santa Barbara County Board of Supervisors is facing an estimated $40 million
budget shortfall this year, and is considering cutting as many as 400 jobs – but
that hasn't stopped the supervisors from spending big on non-essentials,
including $18.4 million for two new county buildings and an office remodel for
the public defender.
Other recently approved
A retirement incentive
program that has cost the county and assorted departments an estimated $13.5
Creation of the Gaviota Coast
Rural Regional Plan, a $1.4 million, four-year project to establish a blueprint
for the future development of rural areas.
A "climate action strategy"
that will cost an estimated $500,000.
Creation of a new countywide
energy financing district that will cost $1 million.
A $40,000 allocation to
seasonal homeless shelters.
A $15,000 bill to test ocean
However, the Santa Maria
Times reported that on March 10, supervisors "showed a rarely seen frugal
side" and postponed action on a request for $350,000 for the first new computer
system the treasurer-tax collector has had in more than 30 years. The board
asked for more details, and postponed a decision until March 23. (Source:
Santa Maria Times, March 7 and March 10.)
(Cal-Tax recommendation: The
county needs to get its priorities straight. It has spent millions on
unnecessary new buildings, including $5.5 million for a new Board of Supervisors
hearing room, while letting a vital computer system get so outdated that the
county's tax collection system is in jeopardy of failure. The Santa Maria
Times reported that "the
mainframe is antiquated, and the only employees who know how it works are
retiring." In 2008, the system overheated and it took two field engineers and
internal staff members several days to diagnose and repair the computer because
the hardware is so old.)
Los Angeles Supervisors
Continue Spending Millions on Parties, Chauffeurs and Other Non-Essentials.
The Los Angeles Times reports: "As Los Angeles County supervisors prepare
to carve deeply into everything from public safety to social services, they also
are spending millions in taxpayer dollars to burnish their public images, pay
for chauffeurs, hold parties for friends and lobbyists and support pet projects.
Each supervisor receives $3.4 million a year to spend as he or she sees fit,
without any public vote or scrutiny."
The spending includes:
$200,000 by Supervisor Zev
Yaroslavsky to support his new website.
$25,000 by Supervisor Mark
Ridley-Thomas to buy a place in "Who's Who in Black Los Angeles."
$99,000 by Supervisor Don
Knabe for an armed driver.
The Times reported
that supervisors and county workers have not been cooperative when asked for
documentation of where the money has been spent, and generally refused to be
interviewed. Still, the newspaper obtained a significant amount of information
after filing a Public Records Act request.
The paper reported:
"According to the records, Los Angeles County leaders gave a total of $4.8
million to outside groups in the last 28 months – sometimes boosting their
public profiles or benefitting people to whom supervisors had personal or
political ties. Antonovich's name is emblazoned on the schedules of soccer
leagues he supports, and Knabe is listed as a benefactor in many nonprofit
newsletters." (Source: Los Angeles Times, March 10.)
These slush funds must be abolished, immediately. There is simply no
justification for the supervisors to be authorized to spend a combined $17
million per year without any vote or public accountability.)
San Francisco Library
Spends Money on Social Worker Instead of Books.
The main branch of the San Francisco Public Library has become the first known
library in the nation to hire a full-time social worker – for $85,000 a year –
to help homeless people.
(Cal-Tax: It is
interesting to note that in 1978, as Californians were preparing to go to the
polls to vote on Proposition 13, the San Francisco libraries posted signs
reading: "NOTICE! If Proposition 13 passes on June 6, the San Francisco Public
Library WILL CLOSE EFFECTIVE JUNE 30, 1978." The library not only survived, but
has expanded with a
multimillion-dollar improvement program,
and now is doing well enough to hire a social worker.)
An Associated Press
report explains that the library "is near a neighborhood of single-room
occupancy hotels, soup kitchens and other service providers for the very poor."
The story continues: "Some mornings, just after it opens, the library seems to
have more people who appear to be homeless – wearing half their clothes and
carrying the rest – than not."
The San Francisco
Chronicle describes the library's situation in more detail: "There has long
been an unwelcome footnote at the San Francisco Main Library in the Civic
Center: homeless people who hang out among the shelves, sometimes cursing loudly
or threatening others. The bathrooms often have proved downright scary, with
people doing drugs, bathing in the sinks and having sex in the stalls. Patrons'
comments collected by the library over the past couple of years include, 'The
Main Branch library, while well-intentioned, looks like a homeless shelter
inside and out.' And, 'The homeless are driving me and many of my professional
friends away.'" (Sources: Associated Press, February 22; San Francisco
Chronicle, January 11.)
(Cal-Tax recommendation: The
city should differentiate between the library and a homeless shelter, rather
than hiring a social worker and further blurring the lines. Turning the library
into a homeless shelter is a disservice to taxpayers who want to use the library
for its intended purpose, and a disservice to homeless people who would receive
more compassion and care at a true shelter.)
Orange County Spent
$842,450 on Failed Information Technology Plan.
Orange County spent $842,450 to create an information technology plan that
leaves out critical information and fails to guide the policymakers who are
considering the county's future technology needs, according to a report from the
county's performance auditor. "The plan does not achieve its intended purposes:
to serve as an actionable road map for countywide IT operations and investments
over the next five years," according to auditor Steve Danley's report.
For example, the plan does
not discuss outsourcing, even though that option has been weighed, nor does the
plan include any metrics to measure progress toward implementing a strategic IT
The county's IT chief
disputed the findings of the auditor.
This is not the first time
Orange County has been criticized for its handling of technology. In December,
Mr. Danley reported that the county had awarded $45 million in no-bid contracts
relating to IT projects during a four-year period. In 2006, a $6 million
computer mainframe was delivered to the county before the supervisors even voted
to approve the spending. (Source: OC Watchdog, February 24.)
(Cal-Tax recommendation: The
county already has taken the wise step of calling for audits of IT spending, and
supervisors should be ready to act on the findings of the auditor, before more
money is wasted on flawed plans or more contracts are awarded without
Tulare County Misspent $1
Million in Federal Stimulus Funds.
State Inspector General Laura
Chick reported March 2 that a Tulare County agency improperly spent $1 million
in federal stimulus money.
The Tulare County Workforce
Investment Board spent the money on rent, equipment, utility bills and other
overhead, when most of the money should have been used for summer jobs for
Ms. Chick criticized the
accounting practices of the agency, saying, "Problems included miscoded
revenues, erroneous journal entries, inappropriate allocation methodology and
shifting of expenses."
Among other things, the
agency recorded expenditures for only $2,079,039 of the $6,847,084 in Recovery
Act funds that were received.
Ms. Chick said: "We've been
told not to worry by officials at the Federal Department of Labor and the State
Employment and Development Department. They feel that the (Workforce Investment
Board) will reconcile these discrepancies and make the accounting adjustments at
the end of the 2011 fiscal year. While this might be legal and might make sense
at the end of the day, this kind of confusing and convoluted accounting flies in
the face of the intent and spirit of the Recovery Act." (Source: March 2 letter
from Laura Chick to Governor Arnold Schwarzenegger and to the Tulare County
Workforce Investment Board.)
Obviously, Tulare County needs to tighten up on its accounting procedures. We
commend Ms. Chick for continuing to be the government's most outspoken critic of
waste and mismanagement.)
Flood Control District Fined $275,000 for Allegedly Polluting Harbor.
The Los Angeles Times reports: "The Los Angeles County Flood Control
District faces a state fine of almost $275,000 for allegedly allowing bacterial
pollution to flow into the harbor at Marina del Rey for more than two years."
The state cited 186 violations from 2007 to 2009 of the district's storm water
The fine is not
yet official. The California Regional Water Quality Control Board will decide
May 17 whether to assess, modify or rejection the fine. (Source: Los Angeles
Times, February 23.)
recommendation: The obvious recommendation is for the water district to correct
its mismanagement issues and start improving water quality – the reason for the
district's existence. Unfortunately, when one government agency fines another,
the only person who actually suffers a penalty is John Q. Taxpayer. In this
case, the residents of the flood control district will be paying the fine even
though they also are the people who have suffered from the polluted water.)
Los Angeles County Has
Been Buying $40 Pens, Wasting $162,000 a Year.
Los Angeles County officials
recently eliminated thousands of pricy items from the county's official
government office supplies catalog – but only after years of allowing county
workers to buy $40 pens and $131 floor mats.
Chief Executive Officer Bill
Fujioka said he "wasn't aware" that county workers have had the choice of buying
fancy pens instead of 24-cent ballpoints. He said that under the new purchasing
options, the county's annual pen bill will drop from $195,000 to $33,000.
The county spends $6 million
a year on office supplies, and a county official estimates that purchasing
lower-cost items will trim 25 percent to 30 percent off the bill. That estimate
came from Joe Sandoval, a purchasing manager who recently went line-by-line
through the 18,000-item office supply catalog and trimmed it in half.
Cal-Tax Vice President of
Communications and Research David Kline was quoted by the Inland Valley Daily
Bulletin, saying: "It just boggles the mind that anyone would consider a $40
pen a wise use of taxpayers' money. It's sad that it took a major recession for
them to even scrutinize this list and eliminate the wasteful spending." (Source:
Inland Valley Daily Bulletin, February 16.)
Sacramento City Council
Members Get $50,000 Each to Spend at Their Discretion.
In what critics have labeled
as a "slush fund," each Sacramento City Council member gets $50,000 a year of
taxpayer money to spend as he or she wishes, with no public hearings or votes.
Sacramento Mayor Kevin Johnson, who campaigned on elimination of the funds, said
the "council felt strongly that those were their dollars, and I wasn't going to
get the votes on this."
Jon Coupal, president of the
Howard Jarvis Taxpayers Association, said, "The discretionary funds can be
properly labeled as slush funds."
Most of the contributions
went for sponsorships of activities and for tickets for fundraising dinners of
various organizations and special interest groups, and other activities that
taxpayers would have to pay out of their own pockets to attend. Many of these
expenditures clearly should have come from campaign funds, not taxpayer dollars.
(Cal-Tax: What is particularly unfair is that not all organizations are
treated the same. Why should some PTAs get slush funds while others do not?)
Most of the spending occurred
in small increments, with many items in the neighborhood of $100 to $500, but
the spending adds up significantly.
Some of the expenditures by
individual City Council members:
Sponsor prison guards
Sponsor "Bamboo Classic
Table at dinner for Asian
Peace Officers Association
Sponsor Camellia Waldorf
KVIE membership renewal
Capitol Public Radio
Earth Day sponsor
Sponsor "The Spot" teen
French Film Festival
Subscription to the
pricey California Lecture series
Tickets to United Farm
Workers union fundraiser
Sponsor event by College
Democrats at Sacramento State honoring Assemblyman Dave Jones and others
Reimbursement to Steve
Maviglio for plants at Stockton and T streets
Purchase of laptop
Organizations that are
recipients of this largesse can be expected to look favorably on re-electing the
giver, to stay in the gift-recipient loop.
A number of payments are for
ads in various programs or publications of certain groups. For example, City
Councilman Steve Cohn spent $110 for a sponsorship ad in the December 2008 issue
of the Sacramento Valley Union Labor Bulletin. (Source: KCRA-TV,
Sacramento, February 8 and February 9.)
(Cal-Tax recommendation: The
discretionary accounts should be eliminated. There is no public policy
justification for gifting tax dollars to special interest groups. In the
meantime, the ads in various programs and publications should thank the
taxpayers of Sacramento, not the individual council members.)
Los Angeles Coffers Empty,
but City Council Members Benefit From Increased Discretionary Budgets.
held by Los Angeles City Council members are flush, even as the city's general
fund is deep in the red, the city controller reported this week.
Council members' accounts
have grown as the city has collected revenue generated from the sale of surplus
property. Under current city law, half of the revenue generated from the sale of
surplus property goes to council members' discretionary funds, while the other
half goes to the city's general fund, which currently faces a $400 million
deficit. Funds deposited into the discretionary funds generally are
unrestricted, and have little oversight.
Los Angeles City Controller
Wendy Gruel reported February 10 that these funds should be made transparent,
and said all of the revenues generated from the sales of surplus property should
be deposited into the city's general fund.
Over the last 12 years, Los
Angeles City Council members have obtained $25 million that otherwise could have
gone into the city's general fund. (Source: Los Angeles City Controller's
Report, February 10.)
While the controller's report does not note how the council members used
their discretionary funds, use of the surplus revenues to address the budget
deficit would seem to be a more efficient use of taxpayer funds. This use of the
revenue also would be more transparent to taxpayers, since the spending would be
detailed in the budget. City councils should eliminate discretionary funds to
avoid the appearance that elected officials have "slush funds" of tax dollars
that can be spent without oversight.)
Former Directors of El
Dorado Irrigation District Cite Waste and Mismanagement.
Six former directors of the
El Dorado Irrigation District, a public entity formed in 1925 under California
Irrigation District law and providing water to 100,000 customers, have charged
the district with frivolous spending.
In a column in The
Sacramento Bee, they wrote that the EID proceeded to "spend like there was
no tomorrow," and cited:
Expenses to water conferences
for friends of board members.
Four-figure restaurant bills.
Contracts to friends of board
members, such as $10,000 to research how other water districts get their legal
Two infomercials (costing
approximately $50,000) that aired late in the night to let insomniacs know what
a world-class utility EID is.
A $166 million five-year
capital improvement program in 2003 which they say is extravagant, and another
$133 million in new debt in 2009.
A dramatic increase in labor
costs, from $11 million to $34 million in just six years.
An increase in the CalPERS
retirement benefit formula from 2 percent at 55 to 2.7 percent at 55,
retroactive for all years of EID service.
An increase in staff from 180
to 305 employees in less than five years.
As a result, despite rate
increases for the last six years, another 35 percent rate increase has been
The six former directors are
asking the Legislature's Joint Audit Committee to review the district's
The six former board members
making these charges are Al Vargas (1999-03), Eugene Larson (1969-95), Richard
Akin (1994-03), Howard Kastan (1991-93 and 1997-2001), William Bergmeister
(1989-91 and 1999-01) and Raymond Larson (1996-99). (Source: The Sacramento
Bee, January 29.)
(Cal-Tax recommendation: The
Legislature should take the former board members' advice and audit the water
district, and should consult with the former board members, since they are
familiar with the board's operations and finances.)
Indio Accused of
Misspending $500,000 in Housing Aid.
The U.S. Department of Housing and Urban Development alleges that the city of
Indio (in Riverside County) misspent $500,000 in federal funds intended for
housing-related programs. The city instead used the money to offset its general
fund to pay for code enforcement, the federal government says. In a letter to
the city, a HUD official said, "We can appreciate the challenges that cities are
facing with the state budget crisis, but using (Community Development Block
Grant) funds to solve its budget problem is not the purpose of the program."
Indio will not have to repay
the money as long as it develops an "action plan" for future spending, and will
not lose out on future federal funds because of the misuse of the block grants,
a city official said. Mark Wasserman, assistant to the city manager, said, "We
take responsibility for the error and will fix it." (Source: The Desert Sun,
(Cal-Tax recommendation: It
is good that the federal government discovered the misspending and that the city
has taken responsibility for it, but the fact remains that money intended for
housing development was spent for other purposes, and there is no penalty for
the transgression. Some sort of punishment is needed to keep this sort of abuse
of tax dollars from happening again, lest taxpayers become even more
disillusioned with their government.)
La Quinta Spends Big on
Sculpture, Then Spends Again to Have It Removed.
In 1996, the La Quinta City Council authorized spending $93,000 in tax dollars
for a sculpture that was placed at a busy intersection as an attempt at public
art. In 2001, the city spent an additional $34,900 for improvements. Now,
responding to public complaints that the sculpture is an eyesore, the city is
going to spend another $15,000 to remove and dispose of the piece.
The sculpture, titled "Oasis
One Eleven," is described as an "art piece-turned-blight" by The
Desert Sun. The artist contends that city officials have failed to polish
and maintain the bronze piece, but city officials say the now-dingy artwork "was
not what was originally envisioned" and was "not in keeping with community
design standards." (Source: The Desert Sun, January 20.)
Public art is a constant source of debate – should government stay away from art
entirely, or does taxpayer-funded art sometimes provide a public benefit by
making an area more enjoyable and more attractive to tourists? The jury is still
out, but this example illustrates that government officials would be wise to err
on the side of caution, lest they follow in La Quinta's footsteps by spending
almost $143,000 to install and then remove a hunk of bronze that has the look of
a bunker for defending against Nazi attacks on the Maginot Line.)
Unused City Phone Lines Cost
Los Angeles Taxpayers $3 Million a Year.
Nearly 12,000 municipal phone
lines sit unused at a cost of $3 million per year, according to an audit
released January 14.
"With the city facing a
massive budget deficit, we must look at every way we can save money," Los
Angeles City Controller Wendy Greuel said. "While the policies are strong,
oversight is severely lacking."
In addition to unused phone
lines, the controller found that city employees had placed unauthorized calls to
Mexico, Canada and the Philippines.
In response to the audit, the
city has revised its telephone procedures. Randi Levin, general manager of the
Information Technology Agency, which oversees the city's telephone system, said
all long-distance and international calls now must be placed through a city
Telephone problems in Los
Angeles are not new. Former City Controller Rick Tuttle reported in the 1990s
that the city had failed to pay a number of its phone bills and may be required
to pay penalties of $800,000 per year.
Having oversight procedures in place is not enough. Officials should ensure that
procedures are followed, and that oversight continues so that further taxpayer
dollars are not wasted. Also, Los Angeles may not be alone. Other cities should
examine their phone systems to see where savings might be found.)
City's Plan for Low-Cost
Housing Includes No Money to Build Homes.
The Coachella City Council is in the midst of a plan to use $6 million in
redevelopment money for low-cost housing. But The Desert Sun reports that
"all the money was spent to buy property and no money was set aside to build
houses." Since the sale of low-cost housing units was supposed to generate money
to pay back a $6 million loan, this puts a big hole in the plan.
"Going forward with the
projects at this point may not make much sense, because the recession has given
the city a large stock of low-income housing," the newspaper said in an
editorial. However, the paper noted: "Low-income housing is not just an
altruistic goal for the city. The California Redevelopment Act requires that at
least 20 percent of the profits from tax-increment financing be spent on
low-income housing." (Source: The Desert Sun, January 15.)
(Cal-Tax recommendation: The
city already has taken a good step by commissioning an independent investigation
into several problems that led the project to go off track. In the bigger
picture, state officials need to re-examine the law that requires the city to
spend tax dollars on low-income housing even when there is an oversupply of such
Sacramento Pays Massive Legal
Fees Instead of Making Minor Change to Building.
The city of Sacramento owns
and operates the Sacramento Community Center Theater, which recently was the
subject of a complaint by a disabled theater patron who couldn't get to the most
desirable seats in her wheelchair. Rather than spending an estimated $80,000 to
make the theater more accessible to disabled patrons, the city ignored the
patron's requests, which led to litigation. Now, the city has settled the
litigation by agreeing to make the changes, and a judge ordered the city to pay
$140,000 in legal fees to the patron's attorneys.
In an editorial, The
Sacramento Bee stated: "Those fees might have been substantially reduced or
avoided altogether had the city treated (the theatergoer's) initial complaint
seriously." The paper added, "Governments have a higher duty to protect the
rights of the disabled than private businesses." (Source: The Sacramento Bee,
Government workers at all levels should learn from this example, and should try
to work out problems right away, before they escalate. Ignoring complaints or
adopting an imperious attitude will only lead to costly litigation. Also, since
the government has mandated that all buildings be accessible to the disabled,
government agencies should be especially attentive to complaints about lack of
Lathrop City Council Uses
Tax Dollars to Send Holiday Cards.
Dennis Wyatt, managing editor
of the Manteca Bulletin, reports that the Lathrop City Council recently
used scarce tax dollars to send out hundreds of cards with a color photo of the
five-member council and a "season's greetings" message.
Mr. Wyatt writes: "This, of
course, cost money and staff time. There's the card itself, the envelope, the
postage, and the time it took to stuff the envelopes and mail them. Forget the
fact that Lathrop is bleeding red ink all over the place, may face a reduction
in police manpower plus other municipal workers, and its civic leaders are
seriously pondering a sales tax for fire protection due to financial woes that
are threatening the fire district's ability to protect property and lives.
There's always money to stroke the collective ego of politicians."
The writer then says: "It
would be interesting to know what the California Taxpayers' Association and the
Fair Political Practices Commission would think about the card mailed at
taxpayers' expense. It is so blatant that it defies justification." (Cal-Tax:
Since he asked – We love holiday cards, but we agree that elected officials
should use their own money and time to send out holiday greetings. 'Tis the
season to be jolly, yes, but 'tis always the season to use tax dollars wisely,
and only for legitimate government purposes.) (Source: Manteca Bulletin,
(Cal-Tax recommendation: The
Lathrop City Council members should reimburse the city for the money spent on
this card, and all elected officials should remember that every penny saved is
like another penny of new revenue.)