Local officials are contesting the assertions of the state auditor.
Marysville and Yuba City are two of the most financially distressed in the north state and top 30 in the state, according to a recent report released by the California State Auditor’s Office. Local officials question the validity of the findings, saying the statistics used are outdated and paint an incomplete picture.
Using information from Fiscal Year 2016/17, the state auditor’s office looked at the fiscal health of 471 cities across the state. The study looked at factors such as each city’s liquidity, debt burden, general fund reserves, revenue trends, pension obligations, pension funding, pension costs, future pension costs, post-employment benefit obligations and post-employment benefit funding.
State Auditor Elaine Howle said her office would be reaching out to the state’s most at-risk cities in the days ahead to see if they have a plan to deal with their financial situation. If not, she warned that her office could seek legislative approval to do an independent audit.
A total of 18 cities were considered at high risk of experiencing financial distress, and Marysville topped the list of Northern California cities as the 16th most at-risk. Yuba City was considered to be at a moderate risk, but was ranked 26th in the state.
Marysville City Manager Marti Brown said it was deeply troubling hearing about the city’s ranking through a media report about the prospect of the state auditor conducting an audit of the city’s finances based on outdated information.
“Unfortunately, the state auditor’s damaging and outdated remarks only further hinder the renaissance of cities like Marysville by deterring already difficult to attract private investment and public-public partnerships, as well as exacerbating historic and negative stereotypes of the city,” Brown said.
According to the findings, Marysville was considered high risk in areas such as debt burden, pension obligations, pension funding, future pensions costs and post-employment benefit funding.
Brown said that information doesn’t take into account what the city has accomplished since 2016, including the implementation of a 1 percent general sales tax, improved bond ratings, an increase in tax benefits from the opening of two marijuana businesses; and the issuing and reissuing of old bonds that will amount to approximately $385,000 per year in savings.
Brown said the city’s general fund reserve has gone from $269,729 in 2016 to $2,456,504 in 2018, and general fund revenues have also gone up about $2 million in that time – this fiscal year, general fund revenues are projected to exceed $10 million. Marysville has also instituted cost recovery mechanisms for the city’s fire and community development departments, developed a new financial model to better forecast revenues and expenses, and is working to update its 32-year-old General Plan expected to lead to more growth, development and economic opportunity, she said.
After hearing about the findings, Yuba City Manager Michael Rock reached out to the auditor’s office to figure out what they looked at when coming to their conclusion. He said the state sent back a list of the 10 metrics considered, but Rock felt those factors were in no way analytical and were esoteric.
“We are still trying to figure out how we are considered to be the 26th most financially distressed city in the state. To us, it’s confounding, and we don’t know, honestly, their methodology,” Rock said.
Yuba City was ranked as high risk in areas such as liquidity, debt burden, general fund reserves, future pension costs and post-employment benefit funding.
Paradise was considered to be the third-most at-risk city in the north state, coming in at 33rd in the state. Other Yuba-Sutter jurisdictions fared better with a low overall risk, including Wheatland (336th in the state) and Live Oak (449th). Colusa County was ranked 301st in the state.
“I’m more than a little concerned about the findings, because somebody made a judgment call on the rankings, and I don’t know how they did it, how they ranked one above the other,” Rock said. “There’s nothing analytical about their findings.”
To view the state auditor’s findings regarding the fiscal health of California’s cities, go to https://www.auditor.ca.gov/bsa/cities_risk_index.