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City of West Covina
Its Deteriorating Financial Situation Threatens Its Fiscal Stability and Its Ability to Provide City Services

Report Number: 2020-806


City of West Covina

November 2, 2020

Elaine M. Howle, CPA
California State Auditor
621 Capitol Mall, Suite 1200
Sacramento CA 95814-4761

Dear Ms. Howle:

This is a difficult time for California local governments. Without question, the COVID-19 pandemic will cause more California cities to consider bankruptcy. Most California municipalities predominantly depend on sales tax, property tax, and transient occupancy taxes to pay the bills. The pandemic has exacerbated the situation. California local governments must plan, without delay, for post-pandemic fiscal realities. With the possibility of a recession and what the State Director of Finance calls a “significant negative effect on state revenues”, and considerable uncertainty about recovery, California municipalities must plan now.

With the goal of improving government performance, the Joint Legislative Audit Committee (JLAC) was established by the State Legislature. Audits considered by the JLAC include financial and financial-related audits of government and publicly created entities. In December 2019, the California State Auditor’s Office informed the City of West Covina that it had been selected for review under the high-risk Local Government Agency Audit Program.

The City received the draft report prepared by your office titled “City of West Covina: Its Deteriorating Financial Situation Threatens Its Fiscal Stability and Its Ability to Provide City Services”. The report details the audit conducted by your office, as the result of the audit proposal, which was approved by the California State Assembly Joint Legislative Audit Committee. I have reviewed the report and intend to prepare a corrective action plan to address the risks identified.

Sincerely,

David N. Carmany
City Manager




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