Atwater is second-most financially distressed city in California, state auditor says
Atwater, which has for years struggled to get its finances in order, just made the list of the 18 most financially distressed cities in California, coming in at No. 2.
The California State Auditor’s Office on Thursday unveiled a new online dashboard revealing the fiscal health, or lack thereof, of 471 cities in the Golden State.
That dashboard reveals 18 cities listed as being “high risk” for experiencing financial distress.
Using data from the 2016-17 fiscal year, the dashboard measures a city’s fiscal health using 10 metrics, with a city scoring points based on how they have addressed that topic.
The metrics include a city’s liquidity, debt burden, general fund reserves, revenue trends, pension obligations, pension funding, pension costs, future pension costs and obligations for retiree health care.
The state auditor’s office found that Atwater is at high risk in the categories of liquidity, debt burden, general fund reserves, pension funding and post-employment benefit funding.
Now, Atwater soon could be getting visitors from the state, California State Auditor Elaine Howle said in a press conference Thursday morning.
“The next step for us is to reach out to these cities,” Howle said.
Howle said employees of her office will contact representatives from cities like Atwater, which are at high risk of financial distress, and ask if they have a plan to deal with their finances. If the answer is no, Howle said the next step is for her office to get legislative permission to go in and do an audit.
Atwater struggled financially for many years as city officials borrowed money from its water fund to keep basic services afloat and even considered filing for bankruptcy in 2012.
Last year, the state auditor’s office began formally monitoring Atwater’s financial problems as city leaders worked to move away from years of debt-spending practices.
Mayor Paul Creighton said he wasn’t aware of the state auditor’s new list naming Atwater as the second-most fiscally challenged city in California, but said he wasn’t surprised.
“That’s all true,” Creighton said in a telephone interview. “Pensions are a huge issue for us as a small city.”
Creighton noted a series of changes made in recent months that he said pointed the city “in the right direction,” but said future budget cuts remain a strong possibility.
“I’d say we’re off life support now and breathing on our own,” Creighton said.
But the city’s far from healthy and large spending increases are nowhere on the horizon.
“We’re not rolling in cash or anything like it,” the mayor said. “Big raises are off the table. The idea we could be the highest-paid place to work in the Valley - that’s just not going to happen.”
Still, the city’s deficit earlier this year was down to about $1.4 million from its peak in 2014 of $4.1 million. In July, the city council ended a nearly decade-long “Furlough Fridays” practice that kept City Hall open just four days a week.
The council also has worked hard to move past a string of embarrassing controversies they acknowledge damaged the city’s reputation.
The city muddled through two years that saw four city managers come and go, including one who quit after just 14 days and another who resigned after four months and slapped the city with a hostile work environment claim on his way out the door. The city’s former police chief was fired in 2018 after two years on the job and he turned around and sued the city over his termination.
Last year, the state Justice Department launched an investigation after guns, money and drugs disappeared from the Atwater Police Department’s evidence locker.
Creighton described a city government stabilizing and pointed to the hiring last year of Lori Waterman as city manager and Michael Salvador as police chief. He said communication between elected officials and city staff “has improved 1,000%” and said “there are no more tantrums” when councilmembers lose a vote.
But while the mayor praised what he described as positive momentum, he also stressed the city has “tough challenges ahead of us.”
“We’re not out of the red yet,” he said. “We may still have some future belt-tightening to do.”
This story was originally published October 24, 2019 at 3:46 PM with the headline "Atwater is second-most financially distressed city in California, state auditor says."
