Many of Stockton, Calif.’s fiscal problems can be traced to poor decision-making, weak accounting and fiscal mismanagement, state controller John Chiang said yesterday, Reuters reported. If left unaddressed, the problems will continue to “invite wasteful spending,” Chiang’s office said in a report released yesterday. An audit by his office found that Stockton officials should have been aware of how the cost of retiree health care and labor contracts would place a long-term strain on the city’s finances. Stockton filed for bankruptcy last year after its city council concluded it could not accept further public safety cuts. The California controller’s audit also found that as early as 2006, officials should have been aware that a decline in home-building permits was a potential signal that Stockton’s housing boom was coming to an end and would pare city revenue. Stockton issued $125 million in pension obligation bonds in 2007 along with other long-term debt as its housing market was on its way to a vicious slide that hammered the city’s budget.
