Editorial | Original Article at pe.com
The future of the city of Beaumont is wrought with uncertainty.
In April, the city was rocked by news of FBI raids of City Hall, the residence of City Manager Alan Kapanicas and the offices of long-time city consultant Urban Logistics.
In May, State Controller Betty Yee identified financial discrepancies as the focus of the investigation.
Auditing of the city’s financial reports in fiscal years 2012-13 and 2013-14 by the controller’s office found irregularities between what was officially reported to the state and what actually was spent.
“These substantial discrepancies call for a close analysis by our auditing team,” said Ms. Yee in a statement. “Beaumont residents and businesses need to be assured that their tax dollars are being used properly.”
On May 5, outside accountants retained by the city issued a draft financial report to the city’s treasurer, which disturbingly noted the city “does no long range financial planning and forecasting.”
According to the report, since 2009, Beaumont has borrowed millions of dollars from a fund reserved for capital projects to shore up the general fund. In addition, the city simply doesn’t have the money to repay advances from the fund.
The $57 million elephant in the room is the huge sum of money Beaumont has been ordered to pay to the Western Riverside Council of Governments.
The city was one of many throughout the county which agreed to send developers’ fee revenues to the WRCOG to facilitate road construction and improvements throughout the region.
Despite this obligation, city officials began withholding funds from WRCOG and built its own roads. Last year, the city was ordered to pay $43 million plus interest, which brings the total to around $57 million.
The city’s appeal of the ruling, at the very least, delays having to repay this unaffordable sum. While this legal effort may take years to resolve, the outcome of the case in large part will decide Beaumont’s future.
In this context, it makes perfect sense that consultant Bob Deis of the Public Management Group told the City Council at a recent budget workshop that Beaumont is in “a fiscal emergency.”
Now more than ever, we hope officials and residents remain engaged. The city must do more to be transparent. And it must lay out clearly the state of the city – however unpalatable.