The epoch times

Bay Area’s Biggest Cities Fare Badly in Financial Health Ranking

Commentary

The California ⁣Department of Transportation, affectionately known as Caltrans, divides the state up​ into 12 districts. District 12, ‍Orange County, is a region to itself, with 34 cities. The Bay Area,⁤ District 4, includes‍ nine‌ counties that touch San Francisco ‍Bay and ‌holds 101 cities, more than one-fifth of California’s cities. The counties are Alameda, Contra Costa, Marín, ‌Napa, San Francisco, San Mateo,⁢ Santa Clara, Solano, and Sonoma.

Where do these 101 cities stand financially? What is a good measure to obtain ‍their fiscal temperature? And ⁣where can one obtain the information?

The easiest thing ⁢to do ‌is ⁣to go to ⁤the city’s website, look for the Finance Department, ‍and click on its Annual Comprehensive Financial⁤ Report ⁣(ACFR), ⁢also referred to as ​the annual audited financial statements.

You may be disappointed with some city websites, as⁣ current ‌information ⁢is not always posted. This​ could be due to one or more reasons. It took the outside auditors a couple of years ‌to sign off on the city of San Diego’s audit back in 2008, thanks‍ to its pension funding crisis. And its ⁤2003 ACFR was not issued until 2007. Or it could be poor ‍management, as noted in⁤ “Elected County Auditor-Controllers Behaving Badly” (Oct. 3). But⁣ it explains why we⁢ are looking at⁤ 2018 and 2019 ‌financial statements in this analysis, as ⁣some‍ cities⁤ in other areas of the state still have not​ released their financial​ statements for 2019!

Once you have found the ACFR, scroll down​ to⁣ the Basic ⁣Financial Statements, then​ to the⁣ Statement ‌of Net Position. Go to the bottom of the page and find the “Unrestricted” amount for ‌Governmental Activities,⁣ also ‍referred to as the Unrestricted Net Position (UNP). The ACFR may also provide the population of the city.​ Divide⁣ the population into the UNP to obtain the per capita, which is the amount ​that applies to each resident. This number will provide a⁤ range that is ⁣useful for comparison purposes.

The⁣ chart ⁤below provides the rankings for⁤ the‍ cities by the Bay using‌ this simple metric. There​ usually ‌isn’t much movement year over year in ⁤the rankings, but it is ‌helpful to check for any significant​ changes. Let’s discuss some of the cities that moved eight or more places to ⁤see what secrets they ​may hold,⁣ if any.

The city of Atherton ⁢ moved up 17 places by having a⁢ successful year, where ‌net‍ revenues after expenditures was some $8 ⁢million, helping the UNP ⁤to improve by $6.3 million. Burlingame, which⁣ moved up nine places, had a similar story, with net‍ revenues ‍of $32.1⁢ million, helping its UNP to increase by ‍$19.3 million.

Newark ‌also had a ⁣good year ​with ⁣$17.8 million in net revenues. It also recharacterized $11.9⁢ million out of ​restricted assets. Together‌ it reduced‍ its unrestricted‌ net ‌deficit (UND) by $26.9 million. Sunnyvale, meanwhile, enjoyed​ $85.7 million in net revenues, which ‍was ‌offset by increasing its​ restricted ⁤assets by $28.2 million, resulting ‍in reducing its UND by $50 million.

Brisbane almost tripled its UND with a simple accounting adjustment to​ its⁢ Net Investments in ⁢Capital Assets of​ only ​$5.48⁤ million, but enough⁤ for this⁣ small city to drop 23 places. Healdsburg dropped eight ‌places in a combination of events, half of it like Brisbane, for an increase in its UND of $9.2 ⁣million.

Why all this detail? Because residents of California’s cities should understand where their cities stand and the direction they are moving in. After ⁤I released my original report for 2019, ​while serving in the California State Senate, the ​residents of Vacaville formed a citizens committee. The Solano County Grand​ Jury⁢ even issued a‌ report‌ on its poor standing (see “Grand Jury report urges city to stay‌ on top of unfunded liabilities,” The⁤ Reporter, May 27, 2021). Being in the ‍bottom 10 percentile⁣ of California’s 482 cities was distressing for its citizens, as it should be.

San Jose ‍has garnered‌ significant media attention in the last two decades for its⁣ unfunded actuarial accrued liabilities ​for its defined benefit pension and other post-employment benefits. The heart of Silicon Valley is in 94th place.

A city and county that is imploding before‌ our very eyes, San ‌Francisco, is in 98th place. And ‍a city​ that I ​fly into⁣ often, ‌Oakland, finds the rental car employees telling me ‌not to go to certain locations for fear that ⁢a vehicle‌ window will be busted and my luggage will be stolen. It’s in 100th place. It makes one wonder how a city can hire additional public‌ safety officials when it’s so financially strapped?

The year​ ending June 30, 2019, is ⁤also an interesting starting point, as ‌the next fiscal year will find every city impacted by the beginning of Gov. Gavin Newsom’s drastic COVID-19 pandemic lockdown and the Federal government’s disbursement of significant⁤ financial assistance to ⁢states, ⁣counties,⁣ cities, and other municipalities.

In closing, if your city is one of the 38 in positive territory, thank your city council members, past ‍and⁤ present, for being fiscally astute in‍ their elected roles. If your city is in the bottom 63, ⁤then challenge your city council members‌ to‌ step up their game and start moving the city’s ranking ⁤up in the standings. Hopefully their answer is not to ⁣raise your taxes, but if‌ it is, then you’ll know why. You may want to ⁤enlarge your emergency fund reserves, as ⁤you’ll be ‍the one paying the price for poor fiscal decisions by your city and ‌its elected officials.

Views expressed in this article ​are ‌opinions of the author and do not necessarily reflect the views ⁣of The Epoch ⁣Times.

– What were the⁣ primary factors that led to Stockton’s financial struggles and how is the⁢ city recovering ‍from bankruptcy?

Ued liability (UAAL) in its pension‍ plans, reaching​ over $3 billion in 2020. This liability has had a significant impact on the city’s financial ⁤position, and it is no surprise that‌ San Jose ranks near the bottom of⁣ our list. However, the city has been taking ‍steps to address this issue and has made ⁢progress in reducing its UAAL in recent years.

Another city that has faced financial challenges is Stockton.‍ In 2012, Stockton became the largest ⁢city in the country to file for bankruptcy. The city’s financial struggles were ⁢primarily due to ⁤a combination of high pension costs, declining ⁤revenues, and unsustainable spending. ​While Stockton has emerged from bankruptcy and has developed a plan to address its financial issues, it is still working ‌to recover and ‍improve its financial standing.

On the other end of the spectrum, ⁤we have cities ​like Palo Alto and Los Altos, which consistently rank among‌ the top in ⁣terms of‍ their financial position. These cities ⁣have strong tax bases, low debt levels, and ‍healthy reserves. ‍They also benefit from a robust economy and high ⁢property values, which contribute to their ‍strong⁤ financial position.

In conclusion, understanding the financial health ⁢of‍ California’s cities is crucial for residents and policymakers. By analyzing the annual⁢ audited financial statements and comparing key metrics such as per capita unrestricted net position, we can gain ⁣insights into how well ​a city ‍is managing its ‌finances. This information⁢ can‍ help identify⁤ cities⁢ that ⁣may be at⁤ risk of financial instability​ and guide decision-making to ‍ensure the long-term sustainability of our communities.

Read more: Bay Area City Rankings: ⁤Rise and Fall



" Conservative News Daily does not always share or support the views and opinions expressed here; they are just those of the writer."
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