7 Los Angeles County Cities Made Strong Financial Improvements in Latest Rankings 

7 Los Angeles County Cities Made Strong Financial Improvements in Latest Rankings 
Manhattan Beach, Calif., in a file photo. John Fredricks/The Epoch Times
John Moorlach
Updated:
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Commentary

The city of Compton finally released its annual comprehensive financial report for the year ending June 30, 2022, so an accurate ranking for Los Angeles County’s 88 cities can be provided for this fiscal year. It has won the laggard award two years in a row.

The overall population for the county declined by 1.27 percent for the fiscal year 2022, which was also reflected in the reduction in the homeless population (see What the SCOTUS Decision on Homeless Encampments Means For California, July 10, 2024).

In reviewing the chart provided, you’ll see seven cities that moved up in the rankings by double digits and seven that dropped by seven places or more. Let’s review the year’s winners and losers and try to determine why they were so volatile, while 74 of the county’s cities remained relatively in place.

Taking the winners as they appear in the rankings, the city of Commerce jumped into the top 10 by moving up a dramatic 25 places. Revenues in excess of expenditures of $37.5 million explains the bulk of its $40.4 million increase in the city’s unrestricted net position (UNP).

The city’s management team explained 2022 in the following manner:

“On a positive note, the City of Commerce stayed the course with the budgetary plan for fiscal year 2021/2022 and has effectively restored the reserves that were used during the pandemic while, at the same time, also rebuilding services that were curtailed during the pandemic. The challenge now is how to prudently and effectively rebuild and reimagine the delivery of City services in this new post-pandemic inflationary environment. Options and strategies to navigate these challenges will be part of the annual budget process starting in spring of 2023.”

The city making the biggest upward move was Manhattan Beach, jumping 34 places, into 18th place. Its $65 million of revenues in excess of expenditures explains the bulk of the massive $68 million improvement in its unrestricted net position.

Glendora moved up to 31st place, moving up 12 positions, thanks to revenues in excess of expenditures totaling $39.4 million that improved its unrestricted net position by $37.8 million.

The city of Avalon on Catalina Island continued its upward movement, post COVID-19 lockdown, jumping up 16 places and into positive territory. Tourism was back and revenues exceeded expenditures by $4.2 million, explaining the $4.9 million increase in its unrestricted net position.

The city of La Verne enjoyed revenues in excess of expenditures of $49.4 million, reducing its unrestricted net deficit by $43.3 million and moving it up 14 places.

After dropping precipitously the last couple of years (14 in 2021 and 15 in 2020), the city of Santa Monica bounced back 16 places in 2022 (see Los Angeles County’s Cities Staying Financially Stable, With a Few Exceptions, June 11, 2024). Having revenues in excess of expenditures of $74.1 million explains three-fifths of the $125 million reduction in its unrestricted net deficit. Borrowings for city yards and water projects and the related construction in progress, along with a reduction in overall pension liabilities may explain the rest.

The city of Monrovia jumped up 12 places, leaving the bottom ten cities, thanks to $64.8 million in revenues over expenditures, explaining the reduction in its unrestricted net deficit of $62.6 million.

The cities of Commerce, Manhattan Beach, and Glendora, along with Burbank, jumped ahead of Diamond Bar, even though its unrestricted net position improved. Hawaiian Gardens, Pico Rivera, Calabasas, and Bellflower improved their per capitas enough to also edge Diamond Bar down eight places. This type of movement in the middle of the pack also explains Temple City’s drop of eight places and Paramount dropping seven.

The city of Norwalk had revenues in excess of expenditures of $25 million, but its unrestricted net deficit increased by $20.2 million. Restricting an additional $28.3 million explains three-fifths of the increase. Increasing the net investment in capital assets by $17 million and unearned revenue by $10.4 million may explain the rest.

Not all the cities enjoyed positive annual results. South Gate had expenditures in excess of revenues of $3.9 million. Although it reduced restricted assets by $12.6 million, this was offset by also reducing internal balances of $22 million, accounting for three-quarters of the increase in its unrestricted net deficit by $17.3 million and its dropping eleven places.

The city of Bell Gardens held its own, but its population went down 3,372 (8 percent), increasing its per capita enough to drop it nine positions to 63rd place.

Monterey Park had revenues in excess of expenditures of $11.1 million, but increased its unrestricted net deficit by $26 million, dropping it ten places. Adding $30 million to restricted assets will do that to the unrestricted net position.

As for the remaining cities on the list, it’s always good to toss out the cities of Industry and Vernon, as they both have minimal populations. And, even with all of the stadium activities, the city of Inglewood and its notorious mayor can’t seem to move the dial in a positive direction, dropping to 86th place.

For the last 10 cities in Los Angeles County, here are the tardiness rankings:
  1. Compton, September 5, 2024
  2. Huntington Park, March 28, 2024
  3. El Monte, March 4, 2024
  4. Artesia, January 17, 2024
  5. Vernon, October 4, 2023
  6. Baldwin Park, August 31, 2023
  7. Bradbury, August 21, 2023
  8. Maywood, August 15, 2023
  9. Redondo Beach, July 20, 2023
  10. Lancaster, July 19, 2023
Eight cities were completed between April and June of 2023, 31 cities between January and March of 2023 and 39 cities on or before Dec. 31, 2022, the recommended target date. Let’s hope that city finance directors and their staff members assist their outside independent auditing firms in issuing their financial reports in a timelier manner. It’s the start of a new year and June 30, 2024 ACFRs should be completed by now. One can only hope.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
John Moorlach
John Moorlach
Author
John Moorlach is the director of the California Policy Center's Center for Public Accountability. He has served as a California State Senator and Orange County Supervisor and Treasurer-Tax Collector. In 1994, he predicted the County's bankruptcy and participated in restoring and reforming the sixth most populated county in the nation.