July 27 (Bloomberg) -- California Controller John Chiang said his office will conduct a six-week audit of the finances of Bell, the Los Angeles suburb that paid its city manager almost $800,000 a year until he resigned last week.
Chiang, a Democrat up for re-election in November, said at a press conference in Bell today that the city’s salaries were “unjustifiable,” according to his spokesman, Garin Casaleggio. Chiang’s office will examine all federal and state funds the city received to make sure the money was spent lawfully, Casaleggio said.
The Los Angeles County District Attorney’s office said it was looking into allegations first reported in the Los Angeles Times today that Bell police officers collected absentee ballots and told residents who to vote for in last year’s municipal election.
“We’ve launched a multipronged investigation into several aspects of the city including the elections,” Jane Robison, a spokeswoman for the district attorney’s office, said in a telephone interview.
State Attorney General Jerry Brown yesterday said he’s subpoenaed hundreds of employment, salary and contract records from the city of 38,000 about 10 miles (16 kilometers) southeast of Los Angeles. The Los Angeles Times reported July 15 that Chief Administrative Officer Robert Rizzo earned $787,637 and that Bell’s part-time council members made almost $100,000.
‘Citizens are Outraged’
“A lot of the citizens are outraged that most of their taxes are going to pay the highest-paid officials in the county,” Ali Saleh, a co-founder of the Bell Association to Stop the Abuse, a newly formed citizens’ group, said in a telephone interview. “They sold bonds. We have yet to see the improvements.”
Bell has sold six debt issues since 2003, according to last year’s annual report. The city’s $148 million in total debt amounts to 10 percent of the total assessed property value and $3,800 per resident, according to David Hitchcock, the director of state and municipal finance at the credit-rating firm Standard & Poor’s. The per-resident figure is “moderately high,” according to Hitchcock.
The city’s general obligation bonds are rated A-, S&P’s fourth highest rating.
Taxpayers in Bell pay as much as 1.55 percent of their home’s assessed value in taxes, according to Wendy Watanabe, Los Angeles County’s auditor-controller. The average for the county is 1.16 percent. In Beverly Hills, where the per-capita income is nearly four times that of Bell, according to City-Data.com, residents pay 1.19 percent, she said.
More than 1,000 people packed the plaza in the center of town last night, waiting to get inside a 300-seat community center to call for the resignations of Mayor Oscar Hernandez and the City Council.
Police from surrounding cities, including some in riot gear, stood by as citizens waited to speak at a meeting that lasted almost six hours. Some residents wept as they talked about how disappointed they were with their elected officials.
“You should be ashamed,” 9-year-old Ephraim Martinez said from the microphone stand. “You wrecked our community.”
Earlier in the meeting, the council members agreed to cut their pay to $673 a month. They had earned as much as $100,000 annually by serving on the council and other city boards, the Los Angeles Times reported. Hernandez and Deputy Mayor Teresa Jacobo said they would finish their terms without pay. They said several times they wouldn’t resign. Rizzo quit on July 23.
“Since my first day as mayor, my priority has been to make Bell a city its residents can be proud to call home,” Hernandez said in a statement yesterday. “I apologize that the council’s past decisions with regard to the indefensible administrative salaries have failed to meet that test.”
The Los Angeles Times, citing interviews and records reviewed by the newspaper, reported today that at the same time Bell officials were receiving some of the highest salaries in the nation, the city was cutting spending on police, social services and parks and recreation.
Bell has a largely Latino population with a per-capita income of $24,800 in 2008, according to the city’s latest annual report. More than a quarter of its residents live below the poverty level, according to City-Data.com.
Rising Tax Bills
Hugo Herrera, a construction foreman and Bell resident, said in a telephone interview that his property tax bill has increased 70 percent to $3,500 annually over the past 10 years while his home’s assessed value has risen 27 percent to $174,000. Most of the increase, he said, is due to an almost tripling of the share that the city collects to $650.
“Everyone’s crazy about that,” Herrera said.
Danny Harber, a Bell resident for more than two decades, said homeowners were more inclined to vote for tax increases to pay for added services and city improvements when their property values were rising.
“When your house price is rising 20 percent a year, what’s another $750?” Haber said. “Now it’s a different story.”
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