Beaumont’s solvency in jeopardy

The city of Beaumont has been through a lot in recent years – most of it self-inflicted – but has made significant, laudable steps toward restoring integrity to a fractured and broken government.

Whether the city’s financial problems and failures were the product of pure incompetence, criminality or both remains to be sorted out, pending the outcome of an ongoing investigation. In April 2014, investigators from the FBI and Riverside County District Attorney’s Office raided City Hall, the office of long-time city consultant Urban Logic Consultants and the home of then-City Manager Alan Kapanicas.

Since then, the state has conducted an audit of the city’s finances, finding “widespread deficiencies” in accounting controls. The city has been working diligently to address such issues, which led to shortcomings in everything from keeping track of how money was being spent to knowing how much money the city actually had.

Last week, the city reached a significant milestone in actually having a comprehensive midyear budget report. “This is the first I believe in quite a while for the city of Beaumont,” Onyx Jones, interim finance director, told the council. As has been previously laid out by Acting City Manager Elizabeth Gibbs and City Treasurer Nancy Carroll, the city has long failed to itemize expenditures and conduct adequate budget reviews to keep the public and council members apprised of what’s going on.

As for the city’s finances to date, Beaumont expects a balanced $29 million budget, in part benefiting from higher than projected revenues.

Looming in the background of all this progress, of course, is the pending outcome of litigation between Beaumont and the Western Riverside Council of Governments, a regional agency which sued the city in 2009. According to WRCOG, Beaumont wrongly withheld funds that were supposed to go toward regional road projects and instead spent the money on its own local projects.

In 2014, Orange County Superior Court Judge David Chaffee ordered Beaumont to pay $43 million to WRCOG. “The evidence and testimony reveals that city management and staff engaged in a pattern and practice of deception that transcends the typical give-and-take of dispute negotiation,” Mr. Chaffee said at the time, suggesting the city engaged in fraud.

Beaumont is still appealing the judgment. If the city fails to prevail in court, it faces the prospect of owing, with interest, twice its annual budget, making bankruptcy almost certain.

If anything, Beaumont’s experiences underscore the need for an active, engaged citizenry. Left unchecked, governments can and will veer off into dire circumstances.