WATSONVILLE -- Watsonville's financial condition is poor and made worse by ineffective budget controls, according to an independent audit released Thursday by the Santa Cruz County Grand Jury.

City leaders acknowledge some practices can be improved, but are challenging many of the judgments in the 72-page performance audit by the San Francisco-based Harvey M. Rose and Associates.

"After three years of intense scrutiny and now an $88,000 study, the Santa Cruz County Grand Jury has come up with the 'earth-shattering' news that we need to update some rules and procedures and that the city is in a challenging budget situation," Mayor Lowell Hurst said in a press release.

Among the key findings of the audit are that the city:

  • Spends beyond its means.

  • Does not present financial data with enough clarity and detail to adequately inform decision-makers.

  • Masks operating deficits at Watsonville Municipal Airport and at city parking garages with loans between city funds.

  • Lacks adequate controls on spending such as public safety overtime.

  • Lacks adequate procurement policies and producers to ensure cost-effective spending.

    In a press release, City Manager Carlos Palacios agrees some city practices would benefit from an update, and that steps have been taken to allow an "over-burdened and understaffed" finance department to focus on its systems this year.

    But he disagrees with the audit's

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    characterization of the city's financial strength and budget management practices, saying the report is flawed by a lack of context and disregard for crucial pieces of information.

    This story will be updated.

    Follow Sentinel reporter Donna Jones on Twitter at Twitter.com/DonnaJonesSCS








    Watsonville Complaince Report with Grand Jury -