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Martinez council accepts clean audit, keeps $474,000 surplus in unassigned fund
Summary
The Martinez City Council received a fiscal-year audit showing a clean opinion with an ongoing marina emphasis and voted to retain a one-time $474,000 favorable variance in the unassigned general fund rather than allocate it to reserves.
The Martinez City Council voted Feb. 4 to accept the city's annual comprehensive financial report for the fiscal year ending June 30, 2025, and adopt a resolution to retain a one-time $474,000 favorable operating variance in the unassigned general fund.
City Manager (unnamed) and Finance staff framed the amount as a favorable budget variance largely driven by police‑department vacancies. "The only reason that we have a surplus is because we had really significant vacancies in the police department," the city manager said during the presentation, and staff recommended keeping the variance unassigned rather than allocating it to one-time projects.
External auditors Mays and Associates presented the audit results. Whitney Crockett, the audit partner, told council the city received an unmodified (clean) opinion on its financial statements but noted an emphasis of matter related to the marina and an ongoing material weakness specific to marina accounting. "There was one material weakness related to the marina," Crockett said; the audit also identified three significant deficiencies, including delays in journal-entry preparation and posting of utility payments.
Council members asked detailed questions about the marina and timelines to resolve the material weakness. The city manager said staff has been negotiating with the state and is "nearing the conclusion" of an arrangement that would formalize legacy loans and revise the debt service schedule, but cautioned that the audit language will be refreshed only after an agreed new schedule is in place.
Council also pressed staff on internal-control improvements. Crockett said the city implemented a number of prior recommendations in fiscal 2025 (timely bank reconciliations and changes to general‑ledger super‑user rights), and staff reported new daily reconciliation workflows aimed at ensuring postings within 48 business hours.
During public comment Craig urged the council to address a longer-term structural budget deficit and prioritize housing to increase local disposable income and retain staff. The council did not allocate the $474,000 at the meeting; instead it approved retaining the funds in unassigned balance so they remain available for the coming budget cycle.
Outcome: motion to accept the audit and retain the $474,000 in the unassigned general fund passed unanimously.
What happens next: staff will post the corrected resolution language and return to council with any follow-up materials; the audit will be updated as negotiations on the marina debt service schedule are finalized.
