City Tries to Undo Budgetary Mess

A million-dollar blunder has forced city leaders to approve a radical measure to help keep the city’s Redevelopment Agency afloat.

At an emergency meeting Monday, the City Council decided to take nearly $900,000 from the city’s sewer fund and more than $132,000 from the general reserve to cover more than $1 million in misspent redevelopment funds.

City officials said the money was earmarked to fund capital improvement projects administered by the city’s Redevelopment Agency, but was instead spent to pay administrative costs at the city Economic Development Department and the California Oil Museum and other overhead expenditures.

“Something went wrong,” said Councilman Jim Garfield. “Money was spent from the wrong pile.”

Santa Paula’s new finance director, Glenda Jay, discovered the mistake last month after reviewing city financial records.

She said the money, which was generated through bonds collected with the guarantee of higher tax yields, had been lumped together in a single account that was also used to fund the EDD and museum.

Jay said the misallocation began in 1996 and continued until recently.

Officials said a number of factors were to blame for the mistake, including high turnover in the finance department, various accounting problems and poor auditing.

The council decided to loan the agency money from the sewer and reserve funds and may later refund more than $2 million in redevelopment bonds to save itself from paying interest on the money--and use it instead to repay the sewer and general fund.

That would put a halt to any improvement projects the city has in the works, which few want to see happen.

Although the city is ultimately to blame for the blunder, Garfield said he will inquire why the outside auditing firm hired to check their books didn’t uncover the problem earlier.

“I think there’s some kind of liability here,” he said. “But you hire an auditor to check exactly these kinds of things.”