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City leaders mostly agree with audit

Posted: Thursday, Jan 24th, 2013

WATSONVILLE The city of Watsonville "generally" agrees on many of the points brought up by an auditor's critical report of the city's finances, Administrative Services Director Ezequiel Vega said during the Watsonville City Council's meeting Tuesday.

The council approved the city's response 6-1, with councilwoman Nancy Bilicich voting no.

The independent audit was conducted by Harvey M. Rose and Associates, who were commissioned by the Santa Cruz County Grand Jury.

"We have learned some valuable lessons through this process," Vega said, although adding that it was "time-consuming."

The city disagreed with some of the choices for comparable cities, Vega said.

Vega's report replaced the audit's recommendation of Cathedral City, Colton, Hanford and Porterville cities with Scotts Valley, Morgan Hill and Monterey.

"Some of these cities do not offer the same level of services we use," he said of the audit's choices.

The past two years saw that revenues were less than expenditures, and this trend was even more pronounced within the General Fund, according to the audit.

The report acknowledged that while the city has made "significant reductions" in General Fund expenditures over the past two years, it has not been sufficient enough to offset the spending.

Vega said the city agrees with the finding and is working on a long-term plan to bring the city's reserves "to a more acceptable level."

Fred Brousseau, project manager for the audit, said overtime costs for the fire and police departments are "higher than they should be," especially fire.

Vega said, unlike other cities, Watsonville has not made any cuts to the public safety departments.

"Public safety services is something that is very valuable to the community," he said, later adding that a reduction in public safety officers in Salinas "hasn't been a pretty picture in that town."

The audit claimed that the city had not provided documentation to the auditors regarding a $4.4 million loan from the General Fund to the Redevelopment Agency in 2006 for the construction of the Civic Center building and parking garage.

Documentation is needed to confirm the transfer as legitimate, the audit stated.

Vega said the loan was repaid by approval from the council in March 2011.

The state will conduct a due diligence review of the transaction, he said, which will result in two possible outcomes: the city retains the funds, or the state requires repayment.

If the state does require repayment, the city will have sufficient funds to repay it, Vega said. It would amount to about 2.7 percent of the city's $162 million budget, he noted.

"That will not affect the financial health of the city," Vega said.

For the complete article see the 01-24-2013 issue.

Click here to purchase an electronic version of the 01-24-2013 paper.

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