The Santa Barbara County grand jury found a history of financial mismanagement in Guadalupe and called for the small city to disincoporate in a report released Friday.
The grand jury said the city of Guadalupe has inappropriately transferred more than $7.6 million into its general fund over the last 12 years in order to meet operating expenses.
The grand jury’s report states that city officials transferred an average of $630,000 per year from restricted funds since fiscal year 2002-03 in what the report labeled a “shell game.”
“These funds should have been spent on specific projects for which the money was collected, such as repairing streets and other infrastructure and building a reserve to handle emergencies,” the report said.
According to the report, the jury found 82 examples of mishandled W-2 forms, inappropriate use of state gas tax funds and inappropriate accounting practices in the solid waste fund.
The jury also claims that elected officials did not receive, nor did they request, training necessary to execute their responsibilities.
The report also claims that the passage of three tax measures in November and a new housing development in town will not close the city’s ongoing budget deficits for nearly a decade.
The report did note that current city leadership recognizes the need to follow generally accepted accounting principles.
City Councilman Ariston Julian said that he had not had a chance to read the report yet.
“I know the gist of it,” he said.
Guadalupe will consider its response to the report at Tuesday’s City Council meeting. City Administrator Andrew Carter is recommending that the council appoint a two-person committee to draft a response to the report.
“We’re certainly trying to be completely transparent,” Carter said.
This is the fourth grand jury report looking into the city’s finances since 2003. The only report that was optimistic was released in 2008.