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Report: Charter Cities (Like Vernon and Bell) Have Bad Habits

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Insular little Vernon, corrupt Bell, and nearly-bankrupt Compton are all charter cities--organized under a customized charter rather than under state guidelines the way most California cities are--and surprise, a new LA County Civil Grand jury report has found that charter cities tend to have a lot of bad habits (there are 25 total in the county, including Arcadia, Pasadena, Whittier, Temple City, and Industry). The San Gabriel Valley Tribune reports that the year-long study found that "Of the 22 small-to-medium-size cities analyzed ... only five had balanced budgets in the 2009-10 fiscal year. Others had dangerously low asset-to-debt ratios. Still others had few checks to make sure their city had sound loads of debt relative to income." Industry in particular worried the Grand Jury, with a ratio of $1.34 billion in assets to $755 million in debt ("dangerously low") and too few checks on abuse; Arcadia was also found "deficient in several controls, such as a mechanism for reporting fraud, a rule about having at least two months of reserves and a procedure for negotiating good prices for the city from contractors" (however, it was found to be more fiscally sound than most of the other charters). A consultant tells the paper that "Charter cities are more likely to run utilities and to pursue riskier investment strategies," and they also have a lot more flexibility to do things like "more easily borrow money, pay city officials more, give the mayor more power, or more easily form special districts." What could possibly go wrong?
· After scandals, Grand Jury scrutinizes charter cities [SGVT]