L.A. taxpayer money sitting idle

Hundreds of thousands of dollars in taxpayer money is sitting in inactive Los Angeles trust funds, some idle for more than decade, at a time when declining revenue has forced the city to raise fees and cut services, according to an audit of the Department of Public Works.

The audit, released Wednesday by Controller Laura Chick, also found that the city was forced to return $193,000 to the state from the Griffith Observatory Trust Fund “due to poor program oversight.” In addition, the city failed to recoup $5.4 million in labor costs on the refurbishment project and should claim $3.1 million left over in the observatory trust fund, the audit stated.

“Government is always trying to find ways to pay for providing basic services to the public,” Chick, who was at the Democratic National Convention in Denver, said in a statement released with the audit. “There is no reason that millions of dollars should sit gathering dust, especially when we are seeking to raise fees and taxes on the public.”

The audit focused on dozens of special trust funds overseen by the Public Works Department, most for special projects such as neighborhood groundwater system improvements. The examination found that in general there was “adequate” financial management over the active accounts.

But the department “lacks oversight” of inactive trust funds, many for obscure, long-forgotten projects, the audit said. For instance, the Alley West of Vermont Avenue (Near 8th Street) fund hasn’t been touched for 10 years and has a balance of $29,992, and $1,121 sits unused in the Venice Canals Rehabilitation Fund.

“We’re pleased that Controller Chick’s audit acknowledged that overall the Department of Public Works has adequate internal controls over the financial management of its funds,” said department spokeswoman Cora Jackson-Fossett. “We appreciate her input and will implement the recommendations as appropriate.”

In all, the audit found that $3.8 million from inactive accounts, including the observatory trust money, could be returned to the city’s general fund and that $521,860 from inactive accounts could be returned to businesses or individual taxpayers.

The Griffith Observatory Trust Fund was created in 2003 to pay for refurbishing and expanding the historic structure. The fund received money from the city, state and federal governments as well as private donors and a number of voter initiatives.

According to the audit, the city should have charged the trust fund for $5.4 million in city labor costs but failed to do so. The controller’s office recommended that the city now claim the fund’s $3.3-million remaining balance, since the project has been completed.

Officials with the Public Works Department told the auditors they did not charge for the city’s labor costs because they first wanted to make sure there were enough funds available to pay private contractors.

According to the audit, the department also had to return $193,000 in interest to the state because of a paperwork error: The city failed to submit a “close-out report” for the observatory project within 60 days after the project was completed.

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phil.willon@latimes.com