Inland Empire Cities Weathered the Pandemic, According to Financial Reports

Inland Empire Cities Weathered the Pandemic, According to Financial Reports

A sign reads "End All Mandates" as supporters and truckers gather before a "People’s Convoy" departs for Washington, to protest COVID-19 mandates, in Adelanto, Calif., on Feb. 23, 2022. (Mario Tama/Getty Images)

John Moorlach

John Moorlach

4/3/2024

Updated: 4/4/2024

Commentary
California cities were whiplashed during the twelve months that ended on June 30, 2021. They suffered from Gov. Gavin Newsom’s overly draconian coronavirus lockdown, then benefited from an influx of federal COVID funding to provide a comforting salve.
The Inland Empire city of Adelanto just released its Annual Comprehensive Financial Report (ACFR) for the fiscal year ending June 30, 2021. The independent outside auditors dated their report March 7, 2024. Sadly, the state of California is not the only laggard in releasing its critical annual financial statements (see “Long Overdue Financial Report for California Brings Bad News” from March 18).
This means we can rank the 52 cities in Riverside and San Bernardino Counties for this fiscal year. The good news is that 24 of the cities met the Dec. 31, 2021, deadline. Another 19 cities completed their audits on or before March 31, 2022.
The following eight cities completed their audits later in 2022: Needles on April 5, Yucaipa on April 20, Coachella on April 27, San Jacinto on April 28, Apple Valley on May 25, Fontana on June 9, La Quinta on June 30, and Ontario on Aug. 22. If you reside in one of these cities and bump into one of your elected city councilmembers, surprise them with an inquiry by asking about the tardiness of their financial transparency efforts. But, 19 months later, Adelanto finally showed up.
The Inland Empire saw six cities make some significant moves in the annual rankings. To compare the fiscal activity for 2020, go to “Several Inland Empire Cities Make Big Moves in 2020 Financial Rankings” from Jan. 30. For 2019, go to “Every City in the Inland Empire Ranked According to Financial Health” from June 30, 2023. And the travails of Adelanto are discussed in both narratives. Fortunately, it had a quiet year in 2021.
The rankings are based on the data provided in the annual audited financial statements released by each city in their ACFRs. The reports should be provided on the city’s website. However, some cities do not do so, while others provide a long list in an archival format. The cities of Chino Hills, Moreno Valley, and Rancho Mirage had difficult websites. Two of these cities provided pdfs when requested.
The ACFR provides the city’s unrestricted net position for governmental activities, which is referred to as “owner’s equity” on private sector balance sheets. The ACFR usually provides the city’s population. If not, census data is utilized. During this fiscal year the overall population for the counties of Riverside and San Bernardino only grew by 8,701 (0.2 percent). While some cities grew, many saw negative migration.
Dividing the unrestricted net position by the population provides the city’s per capita, and this number is ranked in the graph below.
The majority of the 52 cities stayed within three positions of their previous ranking. But, six cities moved five or more places, with three moving up and three down.
The city of Fontana made the biggest move up. Its unrestricted net position improved by $100 million. Receiving revenues in excess of expenditures explains $59 million of the increase, with unearned revenues explaining another $27 million. Fontana has been benefiting from the warehousing and distribution industry, and this significant improvement in its balance sheet hints at it.
The city of Big Bear received revenues in excess of expenditures of $8.8 million but saw its net pension liability increase by $3 million and added $3.6 million to its restricted assets. Along with other minor changes it reduced its unrestricted net deficit by $5.4 million and moved up nine places. Here’s to hoping this city enjoys another good ski season.
After moving up six places in 2019, the city of Temecula moved up another five places in 2021. The city’s revenues over expenditures were $29.7 million, explaining the increase in unrestricted net assets of $26.9 million.
The city of Lake Elsinore decided to move $158.3 million into restricted assets, explaining the increase in its unrestricted net deficit of $138 million and its dropping 13 places.
The city of Ontario continues its slide down the rankings. It has been riding a roller coaster, moving up 16 places in 2019 and dropping 12 places in 2020. In 2021 it dropped nine places by moving $43.2 million into restricted funds, explaining the bulk of its $48.2 million increase in unrestricted net assets. But the residents of this city would find reading its annual comprehensive financial statements worthwhile.
The city of Loma Linda increased its restricted funds by $2.8 million, explaining the $2.6 million decrease in its unrestricted net position, but causing it to drop 5 places.
Let’s hope the outside auditors for the city of Adelanto are able to complete the city’s audit for the fiscal year ending June 30, 2022, soon. Then we can continue the fun of determining how each city in the dynamic and growing Inland Empire is faring.
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John Moorlach

John Moorlach

Author

John Moorlach is the director of the California Policy Center's Center for Public Accountability. He has served as a California State Senator and Orange County Supervisor and Treasurer-Tax Collector. In 1994, he predicted the County's bankruptcy and participated in restoring and reforming the sixth most populated county in the nation.

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