Mysterious Budget Document in Artesia City Council Agenda Creates More Questions

 

Artesia, California - Buried deep within a flurry of financial reports in the next Artesia City Council agenda (May 10, 2021) is a ‘working draft’ dated June 2020, purporting to demonstrate Artesia’s gargantuan emergency reserve.  At the time of this article, June 2020 is 11 months ago.  And so begins another saga about Artesia’s mysterious finances and it’s unusually large ‘emergency reserve.’

In June last year, City Manager Bill Rawlings was boasting about having a 113 percent emergency reserve, or about $13.6 million of the budget given that Artesia has an approximately $10 million operating budget.  At the time, it was praised as a feat of financial genius. Today, many think this may be a sleight of hand. Not to be outdone by last year’s emergency reserve, the City Manager is now boasting $15 million in reserves.  

A screenshot of the Working Draft of Artesia’s reserve, found in the May City Council Agenda.

What Is A Reserve?

In order to critique a reserve, it is important to understand what exactly a ‘reserve’ is.  Artesia is a municipal government, and so it stands to reason that the definition of reserve should be synonymous with how governments generally consider reserves.

For government, and nonprofits for that matter, “reserve assets are assets that are readily available to and controlled by monetary authorities for direct financing of payment imbalance,” according to the Organization for Economic Cooperation and Development.  So, it stands to reason that anything that is called a reserve in Artesia should be readily available for use during hard financial times.

There are other definitions for reserves, depending on the entity. For example, private for-profit companies can use reserves for future projects. However, Artesia is a government, and therefore not for-profit. 

“Think about it like this,” explained Andrew Perry, President of Local 1520 of the American Federation of State County and Municipal Employee (AFSCME), “if the City lost a lawsuit and someone sued the City for $15 million, would the City be able to write a check today to cover that amount? At this time, I don’t think it would be able to.”

Without An Audit Report, Any Discussion About Reserves is Moot

Artesia has not published an audit report in years.  According to some sources, the City did conduct audits since then, but because of certain discrepancies no report of the audit findings has been published by the City since 2017. 

An audit report, called a Comprehensive Annual Financial Report (CAFR) would determine and verify the claims of any person debating the subject of Artesia’s reserves. But since there is no independent verification published, no one knows and nobody can make bold claims about Artesia’s reserves.  

It’s possible there is a draft report from auditors which can verify the current numbers, but we don’t know because that information has not been made public. By the way, that information should be out there, as it is vital to having a transparent government.  “Where are these draft financial reports?” asked Perry.  “As union president, I’m concerned that our finances are being played around with, and in a real way our jobs and livelihood may be at jeopardy.”

Subscribe to Eye on Pioneer for the next update about Artesia’s budget and finances, which is currently in the works.

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