Camarillo’s Comeback : City Now Has $1.2-Million Reserve After Treasury Was Wiped Out in ’87 Fiasco

The city of Camarillo--the victim of a faulty investment scheme four years ago that wiped out the city treasury--is making a financial comeback, officials said Tuesday.

An audit that will be presented to the City Council tonight shows that Camarillo now has a $1.2-million reserve in its general fund--up from a deficit of $625,000 at the start of 1990.

“We can finally breathe freely,” said Finance Director Anita Bingham. But she added: “That doesn’t mean we should loosen the belt. We need to continue building up the reserves. It’s always good policy to be frugal.”

In 1987, Camarillo found itself in a crippling financial bind.

City officials say that all of the city’s savings--about $25 million--were lost after former City Treasurer Donald Tarnow borrowed funds to finance highly speculative investments, including long-term government securities.

When the bond market fell, the city charges, Tarnow was caught holding more than $270 million worth of bonds that he was forced to sell at a loss.

Tarnow, now the subject of a civil lawsuit, was fired--and the city began the slow process of rebuilding financially.

After several years of cutbacks and hiring freezes, the modest reserve came as a relief.

“It gives us a little cushion, and we’re going to try to build on that,” City Manager William J. Little said. “We still have some way to go.”

Bingham said Camarillo officials would like to build a general fund reserve of at least $2 million by the end of the 1990-91 fiscal year, which started in July.

“It will enable us to feel comfortable without having to worry about how we’re going to pay the employees,” Bingham said. “It will be there to get us through the hard times. Like your grandmother used to tell you, save money for a rainy day.”

Preliminary figures released in July for the 1989-90 fiscal year showed that the general fund--which covers salaries and operating expenses--was out of the red.

The city’s official financial audit report, which will be presented to the City Council at its meeting tonight, confirmed the early projections.

Once again, Little said, the city will be able to embark upon capital improvements. Some vacant positions at City Hall can now be filled.

“We’ve had to work hard to get back to where we are,” Little said. “We’ve been fortunate.”

Originally, Little said, the city expected the general fund to have a negative $70,000 balance for the 1989-90 fiscal year.

But an increase in funds and a cutback in expenditures allowed for surplus after three years of debt.

In fiscal year 1987-88, the city’s general fund was a negative $4.2 million, the lowest point it reached in the financial crisis.

Anticipating the positive increase in the general fund, the city for the first time since the crisis approved an overall $22.6-million budget in July that allows for capital improvements and new hiring.

The budget, which shows an 18% increase over the 1989-90 plan, calls for a new four-tiered water billing system that penalizes residents for wasting water.

The positions that will be added to the city staff include a senior accountant for the city’s finance department and a recycling coordinator to oversee a citywide curbside recycling program that will start next month.