Sierra Madre : City Council Orders Audit

Responding to residents’ charges that the city has been operating with a deficit for the last five years, the City Council has ordered an audit of Sierra Madre accounts.

City Administrator James E. McRea said the audit will probably be done by Edwards, Eichel & Beranek, a Pasadena certified public accounting firm. It should be finished within 30 days and will examine transfers to and from the city’s general fund, he said.

Steven A. Broiles, one of a group of City Hall gadflies making the accusations, said his review of city financial records between 1988 and 1992 shows that the city improperly shifted at least $1 million from its community redevelopment agency and other accounts to its general fund to cover up a deficit.

McRea said city officials have done nothing illegal and only borrowed the money, a common practice in local government.

“It’s true our general fund owes $1 million to the CRA,” he said.

City Finance Director David Cain said a $1-million interest-free loan was authorized Sept. 22, 1992, by the council, which serves as the redevelopment agency board. No loans were made from restricted funds such as gas or transportation revenue accounts, he said.

McRea said the loan will be paid back from a water bill assessment and other money that the redevelopment agency owed the general fund for projects.