They Knew: The Warnings Were There All Along

More than a decade ago, El Cerrito’s financial warning lights were flashing red. While city officials were promoting visions of sustainability and stability, internal financial records told a very different story—one of depleted reserves, risky practices, and long-term instability. And yet, the city’s leadership looked away. The El Cerrito Committee for Responsible Government also reported on these problems years ago, highlighting the very same risks that were later confirmed in the city’s own audits. Their warnings, like those of the auditors, were ignored.

The 2013 Comprehensive Annual Financial Report (CAFR), discussed during a May 6, 2014 City Council meeting, provided a clear and deeply troubling financial snapshot. At the helm of the city during this period were then-Mayor Greg Lyman and Assistant City Manager Karen Pinkos, both of whom were in positions of direct responsibility. The report by Maze & Associates, the City’s auditing firm, didn’t mince words.

The General Fund—El Cerrito’s primary fund for day-to-day operations—was already spending more than it was bringing in. Expenditures exceeded revenues by $948,104. Meanwhile, the General Fund’s unrestricted cash balance represented less than five days of operating expenses. That is not a typo—less than a week’s worth of available cash.

More alarmingly, the unassigned fund balance, which reflects the actual cushion available for emergencies or unexpected needs, was down to only 16 days of expenditures. That figure is far below even the most lenient best practices for municipal finance.

The auditors didn’t stay quiet. Their Memorandum on Internal Control called out a material weakness in the city’s financial management and warned that if deficit spending continued, “it reduces the likelihood that the City will be able to continue as a going concern.”

That phrase—“going concern”—is not thrown around lightly in the world of public finance. It is a red flag of the highest order. It means that an auditor sees a real risk that the organization—here, a city entrusted with managing public services—may not be able to continue operating without significant intervention.

Let that sink in. In 2014, the city’s own auditor told leadership that their trajectory could lead to insolvency. But despite this, the city continued on with business as usual.

The City Manager Scott Hanin, Assistant City Manager Karen Pinkos and the City Council Knew—And Ignored It

This wasn’t some obscure internal memo. The agenda bill is public. Concerned residents discovered this document years ago and have repeatedly tried to raise awareness. It’s archived on the City’s own website—El Cerrito FY 2013 CAFR—for anyone who wishes to see the warnings in black and white.

Despite this, the City Manager, Assistant City Manager, and members of the City Council pushed forward with spending, approved additional projects, and assured the public that everything was fine.

Some will try to suggest this was a different era, that financial forecasting was imperfect, or that unanticipated challenges derailed the plan. But that’s not what the record shows. The record shows a conscious disregard of available information.

The report even notes short-term borrowing between city funds to cover operational costs—a practice that’s often a sign of deep cash flow issues. The city was literally shuffling money between accounts to keep the lights on.

Even worse, the city had known grant revenue that it misreported, leading to a restatement of its Capital Improvement Fund. The grant had been booked prematurely, giving the illusion of more money than there actually was. These aren’t simple missteps. They are systematic signs of financial mismanagement.

Fast Forward to 2025: Still No Transparency, Still No Answers

Now, over a decade later, the same leadership circle continues to operate with troubling opacity. The city is once again pursuing a costly ballot measure—this time for a new library—and embroiled in yet another legal battle. But how much are these legal costs? Where is the money coming from to pay the lawyers? No one seems to know—or if they do, they’re not saying.

Despite growing legal activity, the City has not provided a clear breakdown in its public budget documents showing how much is being allocated—or has already been spent—on outside legal counsel. Residents are left to guess whether the money is coming from reserves, deferred maintenance, or elsewhere.

Meanwhile, unrestricted General Fund reserves continue to dwindle. Despite repeated warnings and temporary influxes of revenue, the city has once again returned to the very behavior that placed it at financial risk in the past: overreliance on one-time funds to support ongoing costs, weak long-term planning, and no credible strategy to rebuild reserves.

We’ve seen this movie before. In 2014, depleted reserves triggered warnings about the city’s ability to function as a going concern. Instead of learning from that near-collapse, El Cerrito is repeating history—only this time, with even fewer excuses. The economy is stronger, revenues have grown, and the public has stepped up again and again with tax support. Yet the reserves shrink, costs mount, and transparency vanishes.

What’s worse is that past failures haven’t humbled decision-makers. They’ve become more practiced in messaging and less committed to accountability. The script hasn’t changed—but the stakes are higher.

A Pattern, Not a Fluke

In 2018, voters were asked to approve a Real Property Transfer Tax under the promise of funding a new senior center. That tax passed. And what happened? The senior center was shut down less than two years later, and now city officials say it’s no longer a priority. Instead, we are being told that a library and public safety building take precedence. Again, goals change. Promises don’t materialize. Residents are left holding the bill.

There is a pattern here—of overpromising, underdelivering, and ignoring uncomfortable truths. What was clear in 2014 is just as clear today: Fiscal discipline has never been the priority. Managing the narrative has.

It’s Time to Ask: Who Is Paying the Price?

While the city continues to prioritize public relations and new ballot initiatives, many core services remain underfunded, basic facilities go without maintenance, and trust in leadership continues to erode. City officials are now considering new taxes and fees, yet have not owned up to the poor decisions that got us here in the first place.

The question is no longer “How did we get here?” The documents show exactly how.

The question now is: Why do we keep letting it happen?

This blog is informed by archived financial reports, public records, and observations from concerned residents. Readers are encouraged to review the FY 2013 CAFR and related materials on the City of El Cerrito’s website.

🔗 Access the archive here (secure link)