After starting a media frenzy by peremptorily writing a letter to the City of Richmond questioning its ability to “provide accurate and reliable information regarding required financial reports,” (See Letter to State Controller Better Yee, September 26, 2015, and State Controller's Audit, September 23, 2015), the State Controller’s Office (SCO) has reversed itself.
City Manager Bill Lindsay received a call this morning from Mike Spalj, Bureau Chief, Division of Audits, State Controller’s Office, who indicated that, based on their review of the information provided to them by the City, they were cancelling the investigation that was described in their letter of August 25th. He indicated that the SCO would send a letter to confirm this.
While the City of Richmond faces continuing fiscal challenges, it is in many ways no more challenged than most municipal governments, but is more complex. We suspect that all this interest from outside agencies was a result of the bond rating downgrades this past summer by Moody’s and S&P, which we maintain were based on erroneous information and resulted in inaccurate conclusions. The City of Richmond ended up with a balanced budget for FY 2014-15, and we adopted a balanced budget for FY 2015-16. The City is not even close to any kind of financial failure.
The first agency to threaten an audit was the Joint Legislative Audit Committee and the state auditor, but they backed off. Then it was the Office if the State Controller, which has now backed off.
At the September 29, 2015, City Council meeting, the City Council authorized the city manager to move ahead with an agreement with the National Resource Network to provide the City of Richmond with expert assistance in building a sophisticated long-term financial model that can not only inform internal decision making but should also address some of the concerns of the bond rating agencies.
The National Resource Network is a core component of the Obama Administration’s Strong Cities, Strong Communities (SC2) initiative, and develops and delivers innovative solutions to American cities to help them address their toughest economic challenges. The Network works with local leaders to identify practical solutions, share real-world expertise and best practices, and help cities develop the tools and strategies they need to grow their economies. The National Resource Network will provide 75% of the cost with the City contributing 25%.