State comes down on Hercules for bad accounting

May 10, 2012 5:55:02 PM PDT
A Bay Area city in financial turmoil took another blow today. State controller John Chiang released a highly-critical audit of Hercules. Specifically, how it handles the public's money.

In releasing his report, Chiang minced no words calling Hercules' past bookkeeping "the worst set of city accounting records I've ever seen."

"We've had so much turmoil," said Hercules Mayor Dan Romero.

Romero says he thinks Chiang is piling on his troubled city with Chiang's scathing audit of Hercules' finances during fiscal year 2009-10.

"Let's say we were a submarine that was under attack and now the captain decides during the attack to run a fire drill," said Romero.

Romero and a new city council took over last June after embattled former Mayor Ed Balico resigned.

Chiang's audit found during the old administration, the city had almost no accounting of how it spent more than $2 million in state and federal grants.

They include $100,000 for public safety, $146,000 for federal watershed, $469,000 for an intermodal transit center, $577,000 for San Pablo Avenue repaving and $720,000 in state money for housing.

"$2 million unaccounted for and there may be more because we're just talking about one segment. They have no idea what could be out there," said Kris Hunt from the Contra Costa Taxpayers Association.

Nelson Ovila was city manager at the time. He has since resigned and is now being sued by the city and investigated by the FBI.

"I took on the job knowing this was part of the mess we were going to have to clean up," said Steve Duran, who took over as Hercules city manager last October. "When I asked the few employees that have been here a long time when it started, they say it was even before the former city manager that things kind of started going in the direction of fast and loose."

The state audit does criticize Duran and his current staff for failing to supply most of the records requested. The controller made 32 requests for 107 total documents. The city turned over just 15.

"Not too many people who are here now were here then and so just finding the files is a challenge," said Duran.

The audit went on to say the state may ask Hercules to return that $2 million that's unaccounted for. The city manager said they can try, but the city has no money to return. In fact, they cut their budget by half in just the past two years from $23 million 2 years ago and they're expecting another $2 million deficit for the coming fiscal year.


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