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Gardena council receives clean audit, hears $10M'$12M structural risks from card club and fire costs
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Summary
Council received and filed the city's audited comprehensive financial report for the year ending June 30, 2025; auditors issued an unmodified opinion with no findings. Staff highlighted a modest surplus, healthy reserves above policy and potential future hits to revenue from state casino litigation and proposed LA County Fire cost adjustments.
The Gardena City Council on Dec. 9 received and filed the city's audited comprehensive financial report for the fiscal year ended June 30, 2025, after auditors from Gruber & Lopez Inc. issued an unmodified opinion and reported no audit findings.
City staff told the council the audit showed a modest operating surplus of about $628,000 for the year and general fund reserves equal to roughly 39 percent of policy targets, well above the council's 25 percent guideline. "We received an unmodified opinion," the presentation said, noting the report shows the city's financial statements are presented fairly in accordance with GAAP.
Officials used the audit as a chance to flag risks that could alter the outlook. Staff said two looming items could create a structural shortfall: potential losses tied to state legislation and litigation over card-club revenues (identified in the presentation as SB 549) and a proposed LA County Fire protection cost adjustment that staff estimated at about $1.7 million a year. The city manager and finance director described those two threats, together with pension-related obligations, as the biggest fiscal concerns going forward and said the aggregate exposure could range in the $10 million to $12 million area if left unaddressed.
To respond, staff identified mitigation steps already underway: establishing a dedicated deferred-maintenance fund (about $12 million), updating user fees, pursuing operational savings and exploring a local ballot measure to replace the county measure H quarter-percent sales tax currently remitted elsewhere. Staff said the ballot measure would not increase the sales tax rate overall but would shift the quarter-percent to Gardena so the money remains local; the example given was a $5 coffee would cost about a penny more locally because of the quarter-percent rate at stake.
Council members asked detailed questions about how reserves are held, whether deferred-maintenance funds are available for capital repairs and what the city would do if one of the threat scenarios materializes. Staff responded that the deferred-maintenance fund is available for use after council approval and that a range of revenue and expense adjustments remain options if the projected shortfall occurs.
The council formally accepted the audit and filed the report. City staff said they will submit the fiscal year 2024-25 package to the Government Finance Officers Association for recognition of excellence in financial reporting.
