State Controller John Chiang has released the findings of two audits of the city of Montebello and concerns have been raised about $31 million in questionable spending, loans, and fund transfers. The audits concentrated on the city's gas tax fund and redevelopment agency (RDA) funds. Chiang commented that “At the expense of local job development, street repair, and schools, Montebello has made it a habit to tap legally-restricted funds to cover its budget and cash shortfalls. It appears that the City moved money wherever it wanted, whenever it wanted, regardless of the law or the intended purpose of those taxpayer dollars." For instance, according to the findings, RDA money was spent on questionable expenses like dinners in Las Vegas for the City Manager and embroidered polo shirts and golf tournament registration fees for city council members. Montebello was subject to such a financial review due to noncompliance with reporting requirements.
And when it comes to the city's Gas Tax Fund, it was revealed that more than $2 million was used to pay general operating costs instead of repairing streets and roads or repairing storm damage. In response to the audit’s findings, Montebello has released a scathing rebuttal, calling the reports full of “fundamental errors.” City Administrator Larry Kosmont wrote that “The audit misstates the law, makes recommendations and requests without any proper legal authority … and ignores common practices in other local agencies.” The LA Times reports on the city’s other objections:
“He also the said the findings, coming as Montebello is trying to get a short-term loan so it won’t run out of cash in its general fund, ‘exacerbates the financial conditions of the city, which has been making important strides in its financial recovery.’ Specifically, Kosmont took issue with Chiang’s contention that Montebello must repay its redevelopment agency $3.6 million for ‘ineligible expenditures,’ including $3.4 million in ‘administrative costs.’ Kosmont insisted that that the amounts Montebello’s general fund charged its redevelopment agency for administration were ‘on par with other redevelopment agencies statewide.’ He also disputed the controller’s findings that the city understated the amount of money owed to its housing fund.”
Chiang also alleges that Montebello City Council members, who also serve as the RDA board, have a history of authorizing forgivable loans to individuals who are political contributors.
You can read the full audit on the RDA funds here.
The audit on the gas tax funds can be seen here.