Off the Watch List, But Still Among the Riskiest Cities in California

Posted byeccrgPosted inState Audit

The City is no longer on the State Auditor’s formal High-Risk Watch List, but it remains in the bottom 20% of more than 400 cities statewide. That’s nothing to celebrate.

After years of warnings, El Cerrito has improved its standing with the California State Auditor’s Office. Once ranked among the bottom 3% of cities for fiscal health and placed on the Auditor’s High-Risk Watch List, the City has climbed just enough to come off the list. On paper, that appears to be progress.

But let’s be clear: El Cerrito is still among the worst 20% of cities in California for financial health. Being “less bad” is not the same as being financially stable. Residents deserve better than bottom-tier management.

The State Auditor’s risk scores evaluate liquidity, reserves, pension obligations, and long-term liabilities. El Cerrito’s history of weak reserves, rising costs, and structural deficits continues to hold it back. Climbing off the formal watch list does not erase the underlying fragility — it simply means there are other cities in even worse shape.

The City points to reserves as proof of progress, but much of that cushion was built on one-time ARPA dollars. El Cerrito was allocated about $6.2 million in federal aid, quickly absorbed to cover overexpenditures. Now those funds are gone, and reserves are projected to fall below the City’s own policy by FY 26/27. That’s not fiscal stewardship — it’s a temporary patch.

Instead of discipline, the City has leaned on new revenue streams. The Real Property Transfer Tax (RPTT), adopted in 2018, is now a permanent fixture. Sales tax measures have been proposed to make “temporary” hikes permanent, and parcel taxes have been floated to backfill ongoing shortfalls. Residents are paying more while the City sidesteps deeper reform.

And yet, services continue to decline. City Hall is closed every other Friday while staff work a 37.5-hour week. Library hours have been reduced, limiting access while an expensive new library is being pursued. Street repairs are deferred, leaving potholes and uneven pavement. Parks and pools lag behind regional standards, and public safety equipment replacement has been delayed. More taxes, fewer services — this is not the mark of a healthy city.

The September 2025 City Manager’s report touted an upgraded bond rating as proof of fiscal strength. But the State Auditor’s broader assessment tells a different story. Most U.S. cities with S&P ratings sit comfortably in the AA range (AA+, AA, AA-), with fewer than 10% at AAA and only a small share down in the A category. El Cerrito’s A+ rating may sound respectable, but it’s not uncommon. This paired with a bottom-15% Auditor ranking, it signals persistent financial vulnerability.

Bottom 20% Is Not Good Enough

El Cerrito should not accept being “off the watch list” as success. Remaining in the bottom 15% means the City is still at significant risk of insolvency compared with peers across California. Until leadership delivers consistent, sustainable fiscal discipline — without leaning on one-time funds and forever taxes — residents remain at risk.

It’s time for honesty about the City’s condition, not selective storytelling.

Call to Action: Demand Realistic Reporting and a Real Plan

Residents must insist on more than high points. The City needs:

  • Realistic reporting that openly includes the State Auditor’s risk scores, declining reserves, and tax dependence.
  • A real plan for financial sustainability, not short-term patches.
  • Improved service delivery with clear commitments to restore what was cut: longer library hours, regular street maintenance, upgraded parks and pools, reliable public safety equipment, and City Hall open five days a week.

📧 City Manager:

📧 City Council:

📧 City Clerk (for distribution to all Councilmembers): cityclerk@ci.el-cerrito.ca.us

Suggested subject: “We Need Realistic Reporting and a Real Plan for El Cerrito”

Suggested message:
Hello Ms. Pinkos and Members of the City Council,
Residents deserve a complete picture of El Cerrito’s finances — not selective highlights. Please commit to realistic reporting that reflects the State Auditor’s risk rankings, the use of one-time ARPA funds, and reliance on the Real Property Transfer Tax. Just as important, provide a real plan for financial sustainability and improved service delivery. Restore the services that matter most: library hours, street maintenance, parks and pools, public safety equipment, and full City Hall access. Bond ratings are not enough — residents need transparency, accountability, and results.
Thank you.

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