Last week, it was revealed that the Los Angeles city Department of Transportation was sitting on $42.6 million in hidden funds, which immediately became an issue in the mayor’s race. It could be a make-or-break issue for the candidates, City Controller Wendy Greuel and councilman Eric Garcetti, depending how well they articulate their arguments on the matter.
Similar in feel to the “discovered” funds in the state’s parks department that sizzled in the headlines last year, the $42.6 million would have been beneficial to the city during the great recession when services were cut back for lack of funds.
As the Los Angeles Times described the tale of the “misplaced” funds, “In theory, the city allocates money to a fund so a department has cash to start a project. Once the grant arrives, the department reimburses the city. But from 1995 to 2011, the city was reimbursed from the transportation grant fund only twice, according to a City Council memo. The money grew in a fund that was not audited or examined.”
At a Friday night debate held at the Pat Brown Institute at Cal State Los Angeles, Garcetti pounced on the problem, faulting Controller Greuel for not auditing the funds. Greuel quickly countered that it was because of her recommendations for looking at these special funds that the department’s general manager discovered the discrepancy and revealed the pot of cash.
The new issue popped up at a crucial juncture in the campaign. With a little more than a week to go before Election Day, a new poll issued by the Pat Brown Institute found the two candidates in a virtual dead heat.
If Garcetti makes his case that Greuel as controller missed these funds, it would hurt her credibility as the candidate who can best go after fraud, waste and abuse in the city budget.
However, the situation presents a golden opportunity for Greuel to burnish her credentials if she can confirm that it was her recommendations that allowed the department to turn up the missing funds. She said she would produce other audits that the city council, in which Garcetti served as president, did not take action.
The city’s precarious budget situation is a major concern for the voters and this issue speaks directly to that concern. As the state park scandal of last year proved, poor management of government funds and hidden caches during a time of fiscal crisis is an issue the public understands very well.