The waiting game is over, as the cities of Adelanto and Apple Valley have finally issued their annual comprehensive financial reports for the year ended June 30, 2022.
To provide accurate rankings, I wait until the audits by independent Certified Public Accounting firms are completed and posted. Unfortunately, it’s often unknown how long the wait can be.
Customarily, most cities try to complete their audits within six months. Some are happy to complete them in nine months. Those releasing their audits after April 1 of the subsequent year are considered quite late.
Of the 52 cities in the Inland Empire (Riverside and San Bernardino Counties), 22 of them completed the auditing field work before Dec. 31, 2022, and 21 before March 31, 2023. Seven cities were able to conclude their audits before the end of 2023. Apple Valley released its audit on Aug. 12, 2024, and Adelanto on Jan. 8, 2025, winning our “Laggards” award.
Reviewing the graph below, two cities have big stories to tell. Big Bear Lake had revenues in excess of expenditures of $13 million. But for a city with only 5,000 permanent residents, this was such a big deal that an improvement of $9.6 million in its unrestricted net position allowed it to move up 30 places.
The pandemic had a major impact on California cities. With the city of Big Bear Lake being a destination for Southern California residents to recreate, with boating, hiking, and snow skiing, the pent-up demand certainly made itself evident in late 2021 and early 2022. Receiving massive federal relief funds also assisted its balance sheet and that of many other cities.
The city of Ontario had revenues in excess of expenditures of $153.2 million, which contributed to the increase in its unrestricted net position of $159.2 million. This resulted in this city moving up 17 places.
While 40 of the Inland Empire’s 52 cities moved five or less places, Big Bear Lake and Ontario certainly made extraordinary improvements to their balance sheets. Let’s look at the other three cities that moved up six or more places.
The city of Beaumont tripled its unrestricted net assets with an increase of $27 million, thanks to revenues in excess of expenditures totaling $37.7 million. It moved up eight places.
With revenues in excess of expenditures of $12.7 million, the city of Twentynine Palms improved its unrestricted net position by $11.7 million and moved up six places.
In 2022, Coachella had its first annual concert in two years. The city generated $22.4 million in revenues in excess of expenditures, improved its unrestricted net position by $15.5 million and moved up seven places.
With Big Bear Lake, Ontario, and Beaumont making big moves up, the cities of Calimesa and Rancho Cucamonga dropped down, even after having a good year and improving their unrestricted net positions. The same could be said for Yucaipa, Canyon Lake, and Chino Hills.
The city of Fontana had revenues in excess of expenditures of $25.6 million but saw its unrestricted net assets drop by $29.4 million. Increasing restricted assets by $18 million and capital assets by $36.3 million provides the explanation as to why it dropped 12 positions.
Murrieta had revenues in excess of expenditures of $31.4 million, but saw its unrestricted net position drop by $41.1 million. That’s what happens when a city decides to restrict $85.1 million in funds. An increase in its long-term debt explains the difference, dropping it 11 places.
With the ability to recreate again, Palm Springs saw its revenues exceeding expenditures by $86.4 million, explaining the bulk of the $91.8 million reduction in its unrestricted net deficit. Like Big Bear City, another second home and tourist destination, shaking off these communities from the pandemic blues had an amazing impact on their fiscal status.
The rankings should assist the residents of the Inland Empire to ask the probing questions of their elected city council members. One glaring observation one could make are “why are the five top cities in the rankings adjacent to 51st place Cathedral City?” What can it learn from its neighbors to improve its balance sheet? Having a strong fiscal position should be the goal of every city. Enjoy the discussion.
