SAN FRANCISCO — California Controller John Chiang's legislative push to increase oversight of local government finances in the wake of a scandal in the city of Bell has stalled in the face of political blowback.
Five bills sponsored by Chiang meant to improve financial accounting and reporting by local governments and agencies have so far been derailed.
The political stonewalling of the controller's effort came shortly after he suspended lawmakers' pay last month because he determined that the budget they passed was not balanced.
"Why is the Legislature not passing [Chiang's] bills? He is not the most popular guy in Sacramento these days," said Bob Stern, president of the Center for Governmental Studies in Los Angeles.
Stern said it has been made clear that the controller's action on the lawmakers pay has had repercussions.
Chiang ordered the pay suspension after determining the budget approved by the Legislature by its June 15 deadline — which was vetoed by Gov. Jerry Brown — was incomplete and unbalanced. It was left to Chiang to determine the merits of the budget by Proposition 25, approved by voters in November, which requires lawmakers to forfeit pay without an on-time budget.
The controller said the June 15 budget contained more spending than revenue. Lawmakers passed another budget on June 28 based on a new deal between Democratic leaders and Brown. The governor signed it last week.
Chiang's action cost each rank-and-file lawmaker $4,830 during the budget delay, according to the Sacramento Bee.
"There might actually be some legitimate policy objections, but its fair to say that most members of the Legislature are pretty unhappy with the controller right now," said John Pitney, a professor of politics at Claremont McKenna College.
Chiang introduced his legislative package after the small city of Bell in Los Angeles County was thrust into the spotlight by press reports that it paid its city manager, Robert Rizzo, about $800,000 a year, with similarly outsized compensation going to other city administrators and elected officials.
Chiang's bills would have strengthened his office's ability to audit local governments and agencies, increased fines for tardy financial reports, and tightened accounting and reporting standards on the localities. But now two of the bills have died in committee and lawmakers who sponsored the rest of the legislation pulled the measures.
"We really have to look to the author," said Jacob Roper, a spokesman for the controller's office. "It is the author's call on whether or not to pull those bills, and in each case we look to their judgment."
Roper said some of the bills could be turned into two-year bills.
AB 229 would allow the controller's office to create new guidelines for independent audits, similar to those used for school districts.
The bill's author, Assembly member Ricardo Lara, D-Bell Gardens, pulled the legislation and plans to change it to focus on teacher credentialing. A spokeswoman for Lara's office said the bill did not get an allocation it needed in the budget.
However, another bill authored by Lara without sponsorship by the controller passed out of the Senate Committee on Governmental Organization. It would give the state auditor similar expansive auditing powers.
Two other bills were also pulled from committee by their authors. One would impose higher fines on local governments for late financial reports, while the other mandates new accounting and reporting procedures for cities.
In some instances, according to Chiang's office, local governments have not filed in more than three years. As it stands, local governments are fined $5,000 when they file their financial statements late or not at all. The controller's office estimates it imposes $251,000 in fines each year.
A pair of bills to give the controller's office greater authority to conduct audits of localities did not have the votes to make it out of committee.
Some of the bills ran into opposition from the League of California Cities.
Roughly 20 bills related to the Bell scandal and financial oversight of localities have been proposed as of a few weeks ago, according to the league.
"We thought there would be a significant cumulative effect, not just from the package that the controller had introduced but also from all the other bills related to the city of Bell," said Natasha Karl, a legislative representative for the group.
Karl said there are concerns about the broad authority given to the controller in the legislation, potentially duplicated in the bills, and about the cost that would be shouldered by local governments.
The controller's office says its legislation focuses on trying to mend the faults of the financial reporting system in California that were exposed in Bell and other cities over the last year. In several cases, the office was only able to audit the cities after the fact.
That was the case in Bell. The fallout since then has included civil and criminal charges against Rizzo, four City Council members, and other members of Bell's management team. They are accused of misappropriating millions of dollars from the city, which has a population of just 40,000.
Bell, which has seven outstanding bond issues totaling $136 million, has been struggling to fix its politics and finances.
Montebello, which has $126 million of outstanding bonds, has also seen its financial problems intensify this year, including another rare audit by the state controller.
Chiang sent a letter to city officials in April notifying them his office will audit Montebello's finances because it has reason to believe that its annual reports are "false, incomplete, or incorrect."
The letter cited concerns about two "off-the-books" bank accounts that have been open for more than 10 years, the use of $15 million of redevelopment funds used to pay restricted fund loans, and Montebello's use of U.S. Housing and Urban Development funding.
The controller's legislation to try to preempt local financial problems like those in Bell and Montebello will likely have to wait until the controller's political clout returns, according to professor Pitney.
"I think tempers will cool," he said. "People will get over this after they have extracted their revenge."