The Market Correction Will Affect More Than Pension Payments Its growing pension costs will also put additional pressure on its finances.” “West Covina’s unfunded pension liability is very high compared to its annual revenues, and it has only set aside a portion of the funding it will need to pay for the pension benefits already earned by its employees.“My office identified San Gabriel as the eighth most fiscally challenged city in California primarily because it has insufficient cash and financial reserves to pay its ongoing bills and it faces challenges in paying for employee retirement benefits.”.“Lindsay anticipates its pension and other post-employment benefit costs to at least double by fiscal year 2025-26.”.“El Cerrito has not developed a long-term approach to improve its financial condition and has not addressed its increasing pension costs.”.“Blythe has incurred substantial debt and increasing liabilities pertaining to its city employee retirement costs, which could result in the city needing to divert more of its general fund resources to cover these costs in lieu of providing essential public services.”.The one financial threat that was mentioned in all five of the California State Auditor’s requests was pensions. Not long ago, but still prior to the events of the past few weeks, during a hearing in the California State Assembly on February 26, the California State Auditor requested authorization to conduct in-depth audits of the financial health of five California cities, Blythe, El Cerrito, Lindsay, San Gabriel, and West Covina. And at that time, articles that reported on the auditor’s warning published by Reason, Governing, and Associated Press all pointed to underfunded pensions as a primary cause of their financial distress. Stressed CA Cities – Los Angeles Metro area.īack in October 2019 when the California State Auditor warned Californians about 18 cities in immediate financial peril, the overall economic situation looked very different than it does today.

Clockwise, starting from the top, the most financially endangered cities are Monrovia, West Covina, La Habra, Compton, Vernon and Commerce (contiguous), and San Gabriel. Southern California also has its share of financially troubled cities, as shown on the next map segment taken from the California State Auditor’s dashboard. Stressed CA Cities: San Francisco Bay Area Map On this zoomed in segment, the financially troubled cities of (from north to south) Richmond and El Cerrito (contiguous), and Oakland can be seen highlighted in red. This so-called “dashboard” includes data for all the 471 cities on financial variables such as liquidity, debt, reserves, pensions and other retirement benefits. On what the California State Auditor’s office describes as a “ Local Government High Risk Dashboard,” they identified 18 high risk communities: Compton, Atwater, Blythe, Lindsay, Calexico, San Fernando, El Cerrito, San Gabriel, Maywood, Monrovia, Vernon, Richmond, Oakland, Ione, Del Rey Oaks, Marysville, West Covina, and La Habra. In October 2019, the California State Auditor’s Office reported on the fiscal health of 471 California cities. Three major California cities have already declared bankruptcy, Vallejo in 2008, Stockton and San Bernardino in 2012. The specter of California’s cities and counties becoming insolvent is nothing new. and global economy, will cause sales tax revenues to crater for as long as “social distancing” mandates remain in place, and afterwards, even an extraordinary rebound is unlikely to make up for the loss. The recent and long overdue correction in the stock market, triggered by a global pandemic paralyzing huge segments of the U.S.

City of compton bankrupt