Compton city treasurer Douglas Sanders told the City Council it will have to make a decision about its $10 million deficit within the next couple weeks. The city is reeling from high unemployment and a lack of incoming property taxes. The announcement came the day before San Bernardino voted to expedite its bankruptcy filing the face of a $45 million budget shortfall. Stephanie Elam reports from Compton for the NBC4 News at 6 p.m. on July 18, 2012.
Compton Treasurer Doug Sanders offered a candid assessment of city finances at the City Council meeting Tuesday night.
"You all need to be in an office, put your differences aside, and decide if we are going to file for bankruptcy or not," Sanders told the council.
"I've got just under $3 million in the bank and I've got $5 million in warrants," he said. "So, we either have to make a decision in the next 10 to 12 days that either you're going to pay these bonds, chew up all of your cash – which is probably going to be 40 to 50 percent of that -- don't pay the bonds, default on them, preserve your cash, or either have a serious talk about bankruptcy. 'Cause I can't pay this stuff."
Mayor Eric Perrodin told NBC4 he doesn’t think the city as close to bankruptcy as the treasurer does partly because Compton’s pension system is fully funded and operating in a surplus.
Still, to balance the budget, Perrodin said the city may have to cut jobs in a city already reeling from high unemployment – 18.8 percent as of May 2012, according to the U.S. Bureau of Labor Statistics.
Compton’s incoming property taxes have been declining at the hands of rising foreclosures, all while burdened with a deficit of more than $10 million.
"I think it is too late and the elected officials are just playing games with the people," said resident Joyce Kelly.
In recent days, the city's independent auditors quit without signing off on Compton's 2011 financial statement. A credit rating agency has threatened to cut the ratings on some of the city's bonds if a certified audit isn't produced in 90 days.
Another issue is how the city got to this point. Some city officials have been grumbling about waste, fraud and abuse of power.
Resident Lynn Boone, who is planning to run for mayor of Compton in 2013, says nothing would surprise her.
"Transparency and accountability," she says. "There's always been a cash flow problem."
Boone says there's no reason why Compton can't be a real player on the Southern California landscape.
"We have the metro, the train, this is the hub city," says Boone. "We can start making the city pay for itself. To lose it in bankruptcy, I am so hurt."