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State to audit Vernon's finances

http://inlandpolitics.com/blog/wp-content/uploads/2010/09/Vernon.jpg

The state Legislature approved an audit of the city of Vernon Thursday, a week after lawmakers decided against a controversial plan to disband the city.

The audit, requested by state Sen. Kevin De León (D-Los Angeles), will examine the city’s finances and conduct over the last five years as well as its ongoing reforms, his office said. It is expected to be completed in April.

De León’s request came in response to a Times' story on Vernon’s recent investment losses in its power business. Since 2005, the city has suffered a $130-million decline in net assets and amassed close to half a billion dollars in debt.

During the same period, Vernon’s expenditures on salaries and legal fees rose steadily. Five different city administrators made more than $500,000 a year and council members were among the highest paid in the state.

The industrial city, located just south of downtown LA, is home to roughly 1,800 businesses but only 112 residents. Most of the residents live in homes and apartments owned by City Hall.

Critics have claimed that the city has been run for decades as a fiefdom by a small group of individuals. Los Angeles County prosecutors indicted two of Vernon’s leaders on public corruption charges in 2006, and then charged another administrator last year. All three were ultimately convicted.

State Assembly Speaker John Perez (D-Los Angeles) argued that the only way to end corruption in Vernon was to disincorporate its city government and make it a part of Los Angeles County. His legislation passed in the Assembly but was defeated last week when De León and other Senate Democrats rose against it, saying it could cause a loss in jobs.

As an alternative, De León proposed a series of governmental reforms. The plan was unanimously approved by the Vernon City Council.   

“The City of Vernon is compelled to clean itself up and I am hopeful with this audit that it will continue to take the steps necessary to build toward a better future,” De León said in a statement released Thursday.

In addition to the state audit, Vernon is also being investigated by the Internal Revenue Service. The agency informed the city last month that one of its tax-exempt bond issuances may have violated multiple provisions of the Internal Revenue Code.

The IRS declined to comment on the probe, but experts said it’s likely the investigation would focus on whether Vernon’s use of the bond proceeds violated restrictions on tax-exempt debt.

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 -- Sam Allen

Photo: City of Vernon. Credit: Los Angeles Times

 
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