March 23, 2021
The Governor of California
President pro Tempore of the Senate
Speaker of the Assembly
Sacramento, California 95814
Dear Governor and Legislative Leaders:As directed by the Joint Legislative Audit Committee, my office presents this audit report regarding the city of Blythe (Blythe), which we conducted as part of our high‑risk local government agency audit program.
This report concludes that Blythe is a high risk city because of the significant risks it faces related to its financial and operational management. Blythe improved the condition of its general fund dramatically over the past several fiscal years through sustained budget cuts and some increased revenue. However, the city’s general fund reserve is roughly half the recommended level and would likely be insufficient to carry the city through an economic downturn. The city also has no long-term financial plan, but it does have a number of significant funding needs, such as investment in public safety due, in part, to the number of vacant buildings that are associated with crimes such as arson.
Other inadequate city management practices have created operational risks for Blythe. In particular, the city waited more than a decade to update its service fees and for years has subsidized many city services with general fund revenue. As a result, two of its enterprise funds have accumulated debts of $2.8 million. Finally, the city also lacks sufficient contract management protocols, which puts it at risk of fraud, waste, and improper payments.
To address these concerns, we present several recommendations, such as developing a strategic plan to prepare for long-term financial and operational challenges, and developing a policy for updating rates and fees once every five years. We also recommend that Blythe identify initiatives to address risks associated with its high vacancy rate and apply for available grants to support this effort.
ELAINE M. HOWLE, CPA
California State Auditor