The City of Lawndale spent about $1.38 million more than it received in General Fund revenues in the 1987-88 fiscal year, according to a report by Arthur Young & Co., a major accounting firm.
The bulk of the $1.38-million shortfall is made up of a $629,166 investment loss and $285,314 spent on land acquisition, the firm reported. The balance--about $465,000--was council-authorized spending on day-to-day city operations.
The $629,166 investment loss in fiscal 1987-88 is part of $1.68 million that the South Bay city lost in a speculative securities investment that originated the previous fiscal year. Lawndale and several other cities and municipal organizations have filed suit in an effort to recover $8.4 million in losses and $16 million in punitive damages from two brokerage companies that handled the investments.
The report was presented to the City Council, and when Councilman Harold E. Hofmann questioned the overspending, Terry White of Arthur Young replied: “Obviously this is a situation that can’t continue indefinitely.”