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Montebello may have trouble making payroll, paying bills

A city administrator warns that the 'true nature of the city's cash deficit was buried for many years' by various accounting maneuvers.

March 31, 2011|By Jessica Garrison, Los Angeles Times

Montebello is so short on cash it may have trouble making payroll or paying its bills in the near future if officials don't take "immediate corrective action," a city administrator warned this week.

Interim City Manager Peter Cosentini, in a statement released late Tuesday, also revealed that "the true nature of the city's cash deficit was buried for many years" because of various accounting maneuvers.

"Figuring out the math has been challenging, given the lack of sufficient documentation provided as well as the lack of transparency of individuals who prepared and or gave direction [for] the many transactions," he wrote.

In an interview Wednesday, Cosentini said it appeared that former finance officials had been moving money from fund to fund to hide the true nature of the city's financial picture and make it seem as though Montebello had more money than it did. Cosentini said he could not explain why that would have been done.

News about the city's dire budget picture follows weeks of financial upheaval. Earlier this year, officials discovered two "off-the-books" bank accounts that contained hundreds of thousands of dollars in city funds that officials had lost track of.

Los Angeles County Dist. Atty. Steve Cooley has said he is looking into what happened with those funds. In addition, the federal Department of Housing and Urban Development has asked the city to return $1.3 million the agency says was improperly spent.

Some observers, including one councilwoman, have warned that Montebello could end up in bankruptcy.

Cosentini said officials must address the budget problem. "We have been deficit spending for three years in a row, and we continue to do that today, to the tune of $175,000 a month," he said.

Councilman Frank Gomez said he is committed to balancing the budget: "We cannot fall into the same black hole as those who have preceded us."

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