By Not Updating Charges for City Services, Compton Has Forgone Potential Revenue

Compton has also not consistently ensured that its budgets are easily understandable. Compton’s budget document for fiscal year 2021–22 contains many errors, making some parts of the budget difficult to understand and creating confusion. In fact, the city council adopted a resolution in June 2022 acknowledging several errors in this budget and approving corrections to them. For example, some of the budgeted amounts listed in the summary of revenues and expenditures are different from the amounts listed in the detailed budgets for certain departments. The budget amount for the community development department in the citywide summary and the budget amount in the departmental section differ by about $10 million. We discovered similar inconsistencies in the city’s past budget documents. Before finalizing and adopting its annual budget, the city should ensure that its budget documents contain no errors and are comprehensible in order to increase transparency to the public.

By Not Updating Charges for City Services, Compton Has Forgone Potential Revenue

In addition to collecting tax revenue, Compton charges the public for specific city services, such as conducting inspections of buildings. However, Compton has not assessed its service charges regularly, thereby potentially forgoing revenue to cover its costs. GFOA best practices suggest that cities should review and update charges for services periodically to ensure that those charges cover the costs of providing the services. Nevertheless, Compton most recently updated the charges for certain city services, such as building permits and business licenses, in October 2017.

Moreover, Compton has not updated water and sewer utility charges for many years, even though its infrastructure is deteriorating in these areas. According to its website, the city has not increased its water usage charges since 2014. Further, the city was unable to provide us with documentation showing when it last updated its sewer assessment charges. However, a longtime staff member in the engineering division of the public works department stated that he is not aware of any increases in sewer charges since at least 2009.

Compton had also not regularly assessed its garbage service charges, which contributed to a recent dispute with its garbage vendor. According to the city’s July 2019 vendor agreement, the vendor asserted that Compton owed it $1.6 million because the city had undercharged customers and did not compensate the vendor for missing payments from customers with delinquent accounts, among other problems. To settle this dispute, the city subsequently revised its agreement with the garbage vendor and agreed to make installment payments totaling $1.6 million over the next three years. To make the final payment of $1.2 million in 2022, the city had to borrow that amount from its equipment rental fund. However, when we requested information about the agreement between the city and the vendor, city staff were unable to provide a detailed breakdown of how the settlement amount was determined. This lack of documentation raises questions about the accuracy and appropriateness of the amount it paid the vendor in an effort to resolve this dispute.

Because it has not regularly updated service charges to ensure that it accounts for current costs, Compton may be undercharging for its services and thus may not be obtaining revenue that could help alleviate the general fund’s deficit or complete