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Hercules state audit indicates city is all wet

| May 16, 2012 | Uncategorized |

Hercules is a city in Contra Costa County on the southeastern shores of San Pablo Bay, California. According to the United States Census Bureau, the city has 24,060 people and within its city limits it is 65.87 percent water.

The city may be all wet in more ways than one. After a state audit, the California Controller said that the city may owe $2 million for just one year. More bad news may be on the way.

News sources revealed that the state controller looked at the fiscal tax year of 2009-10 and specifically at federal and state expenditures including the Gas Tax Fund and transportation spending. The audit was made public, and it does not speak kindly of the town of Hercules.

One of the keys to surviving an audit is to have the proper documentation ready for the officials involved in the audit. Whether it is a state audit, or an Internal Revenue Service audit, one key principle remains the same — accurate and thorough documentation.

Hercules has been in turmoil recently and that is reflected in their documentation, or lack of it. The city has had three interim city managers after the last one resigned. The bookkeeping was described as being in shambles.

The controller’s office stated that they were given only 15 of the 107 documents they requested. The city countered with the fact that they had the reorganization, resignations and retirements to deal with, plus running the city, plus audit and information requests from the controller’s office, the FBI and an additional outside auditor.

The current city manager appears to be putting out fires left by the previous city manager. In addition to the $2 million owed according to the state audit, the city is reporting a deficit of an additional $2 million for the current year.

There have been widespread news reports of California cities declaring bankruptcy. It appears as though Hercules may be on a slippery slope headed in that direction.

Source: Contra Costa Times, “State audit blasts Hercules financial practices; more reports coming up,” Tom Lochner, May 10, 2012

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