Tuesday, May 09, 2006 | In a familiar scene with a few new twists, the San Diego City Council voted Monday to approve more funds for the consultants putting together investigations and audits of city finances, bringing the total bill for one group known as the audit committee to $20.3 million alone since February 2005.

The council specifically approved $4.1 million in additional funds for the lawyers and accountants that comprise the audit committee. Officials from the audit committee said the allotment should be the final payment needed to complete an investigation that has been beset by cost overruns and missed deadlines.

The investigation is vital to the release of the city’s long-delayed audits for fiscal year 2003, 2004 and 2005; without those audits the city will remain with a suspended credit rating, unable to borrow money competitively on Wall Street for vital infrastructure projects.

The city’s credit rating has been suspended or downgraded regularly since it admitted to inaccurately reporting its fiscal health to potential investors in 2003.

As they have said when faced with similar situations in the last year, many council members said they hoped Monday’s allocation would be the final needed to break the city’s two-year banishment from public finance markets.

City officials have long held to the hope that the completion of the audit committee’s investigation into allegations of wrongdoing will trigger a series of events that lead to the release of the audits and the eventual reentry into capital markets.

The report from the audit committee is supposed to analyze whether illegal acts were committed at the city in relation to its pension and wastewater systems and the creation of its public financial statements. The analysis will help auditors determine the true state of the city’s assets and liabilities.

Troy Dahlberg of the audit committee said the group was now planning to complete its report by mid-June. Previous deadlines have included October, December, April and May.

“Short of something that is absolutely unanticipated on our part, we would not come before you with any more (funding) requests,” he said.

However, Dahlberg noted that a major hurdle remains for KPMG, the auditor of the fiscal year 2003 financial statement, when the audit committee’s report is completed. He said KPMG will also need to see audited financial reports from the pension system in order to wrap those figures into the city’s statements.

However, the pension system’s audits for fiscal year 2004 and 2005 are also delayed, and officials are unclear when they will be released.

“That’s an important thing, so that needs to be dealt with,” Dahlberg said.

Dahlberg and fellow audit committee member Benito Romano refused to answer questions from City Attorney Mike Aguirre regarding the actual status and specifics of the investigation, a change from previous council hearings on audit committee funding.

Dahlberg also noted that the report is only part of the audit committee’s contract, and that even after the completion of the report it will stay around to see the release of the audit. He said he didn’t believe such work would necessitate further funding.

Councilman Jim Madaffer said it appeared this would be the final allocation for the audit committee.

“It appears that these groups have a gun to our city’s head. But we are so close to getting this thing out,” he said. “… We just have to trust and believe these folks.”

Councilwoman Donna Frye, the lone council member to vote against the funding, said she had already reached her saturation point when it came to the audit committee.

“I’ve heard the story too many times, and I hope the story finally ends,” she said.

The council also was forced Monday to revote on all of the audit committee’s previous contracts and funding requests. The City Attorney’s Office opined last week the revote was necessary after voiceofsandiego.org reported that Council President Scott Peters owned stock in Kroll’s parent company at the time of the original votes.

Peters abstained from Monday’s conversation and the council voted to approve the funding requests again.

Aguirre recommended that the council not approve the funding for Kroll. He provided a seven-page report from KPMG listing the documents it needed to complete the 2003 audit, saying it was proof that the audits were far from being completed.

“You have fully exploited the city,” Aguirre said to the audit committee. “You have hurt our city instead of helped it.”

Please contact Andrew Donohue at

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