State Audit Report: Irwindale City Leaders Need to Control Spending

Irwindale city leaders need to do more to control spending to ensure the municipality's long-term financial strength, according to a state audit released Tuesday, but the city manager disputed many of the report's findings, insisting the city has overcome years of deficits and enjoys a healthy financial reserve.

The report from the California State Auditor failed to uncover any illegal activity by city officials, some of whom have faced criminal cases in recent years that mostly wound up being dismissed. The allegations prompted Sen. Ed Hernandez, D-Azusa, to request the audit earlier this year.

"Although the city has made limited efforts to control costs, it continues to overspend because it has not developed a long-term financial plan, adjusted some of the benefits it provides to its residents or adequately evaluated its use of police overtime," according to the audit. "The city also has not made certain that it receives the best value for the money it spends on contracts or revised its purchasing policy so that staff document that costs for all types of city contracts are reasonable.''

The audit also called into question the management of the Irwindale Housing Authority, the ``generous benefits'' it provides to city employees and its awarding of some vendor contracts without competitive bidding.

The report makes a series of recommendations, such as minimizing the city's use of reserve funds on long-term liability costs and re-examining its police scheduling to cut down on overtime costs. It also calls on the city to develop a debt-management policy.

In a response to the audit included in the report, Irwindale City Manager John Davidson blasts many of the recommendations as being "based on incorrect statements of fact." He wrote that the report failed to find any criminal or fraudulent activity, so instead it "predominantly criticizes and disagrees with spending priorities of the city, a role that is beyond the CSA's assigned objectives."

He said the report's recommendations are largely generic statements that could be applied to any city.

"Irwindale recognizes that it faced several years of deficits in its general fun operations, beginning immediately after the Great Recession," Davidson wrote in the city's response to the report. "However, and despite those deficit years, Irwindale still enjoys an $18.9 million General Fund

Reserve, representing 97 percent of the annual operating expenses for Fiscal year 2015-16. We suspect many cities would be envious of Irwindale's ability to achieve this result, while avoiding any painful cuts to resident services or staffing."

In February, a Los Angeles Superior Court judge dismissed embezzlement charges against Irwindale Mayor Mark Breceda, Councilman Manuel Garcia and former Councilwoman Rosemary Ramirez after the prosecution announced it was unable to proceed with the case.

The dismissal came about a year after a judge threw out charges of misappropriation of public funds and conflict of interest against Breceda and Ramirez. In October 2013, prosecutors dropped charges of misappropriation of public funds and conflict of interest against Garcia, due to statute of limitations issues.

Former city finance director Abraham De Dios pleaded no contest in April 2014 to one count of conflict of interest and was sentenced to three years probation, along with more than $9,000 in fines and restitution. Former City Manager Steve Blancarte pleaded guilty in 2011 to misappropriation of public funds and was also sentenced to probation and ordered to pay fines and restitution.

Many of the charges stemmed from allegations that city officials had misspent public funds during a series of trips to New York that were supposedly taken in an effort to improve the city's bond rating. The officials allegedly spent city funds to attend Broadway shows -- including "Aida," "The Producers," "Phantom of the Opera" and "Mamma Mia" -- and Yankees and Mets baseball games that had nothing to do with official business.

The allegations first surfaced in a 2007 article in the San Gabriel Valley Tribune.