San Jose, CA — Due to questionable financial auditing and possible falsified reports has put Compton in the verge of bankruptcy and will possibly be the fourth city in California to declare bankruptcy. City officials estimated that it is a possibility that Compton will run out of money by the end of summer. The city’s obligations to its creditors amount to $5 million but they only have $3 million more or less.
The bigger problem that the city faces is the $43 million deficit that had been accumulated through the years. The deficit came from improper use of retirement, sewer, and water funds. The creditors are already knocking on the city’s doors but Compton does not have enough reserves to pay off the mounting bills.
The common factor among San Bernardino, Stockton, Mammoth Lakes and Stockton is that these cities tapped the restricted funds in order to show that the accounting of their books are balanced, concealing the actual situation of their financial woes. These municipalities are also signs on how grave the financial crisis is hitting California; add to that the growing pension costs, property tax revenues, improper use of funds and bad accounting practices.
Another possible candidate for bankruptcy or fiscal emergency is High Desert City, a municipality of Victorville. A grand jury report revealed that High Desert City possibly resorted to illegal tactics to solve their insolvency problems. The measures used money from sanitation funds and transferred it to the city’s treasury, borrowed water agency funds to save the city’s electric utility, and dipping the airport bond funds to procure land for a library.
Due to the $69 million questionable dealings, an investigation has been launched by the Securities and Exchange Commission into the inter-department fund transactions of High Desert City. It still currently ongoing.
Another California city, Montebello, admitted that the city is running into problems balancing their books and other fiscal problems but they are not yet in the point of declaring bankruptcy.
When the redevelopment agencies were abolished
In San Bernardino, the redevelopment agency in 2010 disproportionately charged the U.S. Department of Housing and Urban Development. The agency sought reimbursements for expenditures that are not yet even due to fix their cash flow problems.
These are just some of the things that are aggravating the situation in these financially-troubled California cities and on top of that the politics are dirty and ugly.