The California State Auditor has removed Richmond from its list of cities considered to be financially “high-risk,” according to an audit report released Monday.
The removal of the “high-risk” designation comes after a multi-year effort to restore the city’s fiscal health. Richmond was initially placed on the high-risk list in November of 2022 due to concerns about inadequate reserves, projected deficits and mismanagement of its housing authority.
The state auditor’s program identifies local governments with serious financial or operational problems requiring corrective action.
“The City of Richmond’s removal from the State Auditor’s high-risk designation is a testament to the hard work and discipline of our City Council and leadership team,” City Manager Sasha Curl said in a statement. “We have built strong reserves, implemented key reforms and restored financial stability. Through strategic actions of the past three years, the City has built a solid financial foundation — one that positions us for a future full of opportunity and growth.”
The state auditor’s report found Richmond fully addressed seven of 11 risk areas and partially addressed the remaining four. Most significantly, the state noted, the city has maintained general fund revenues exceeding expenditures since fiscal year 2021-22, reversing earlier budget deficit projections.
Richmond’s general fund reserves now exceed $75 million, representing nearly 30% of budgeted expenditures for the following fiscal year — well above the city’s revised 21% minimum requirement. Previously, the city maintained only 15% in reserves.
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The turnaround was aided by Measure U, a voter-approved business gross receipts tax that generated $5.3 million in fiscal year 2021-22 and $7.7 million in 2022-23. The city also entered into a landmark agreement with Chevron in August of 2024, securing $550 million in payments over 10 years beginning in July 2025.
Ongoing challenges include a debt burden of about $250 million and ongoing issues with the Richmond Housing Authority. The housing authority must still complete property transfers required under a federal recovery agreement and must publish outstanding financial audits dating to fiscal year 2020-21.
The city of Richmond also is understaffed, with 18% of its positions unfilled as of June. A consultant’s workforce analysis determined the city needs to fill 74 additional fulltime positions to meet service expectations.
The auditor emphasized the importance of continuing current sound financial practices.
“The city’s future success will be dependent on continuing the beneficial practices it has implemented in recent years,” the report stated.
While I’m happy to see that the city has been able to move into greater financial stability, aided in part by the sacrifices of the staff who have consistently done more with less, the staffing crisis is still critical. The amount of additional work that all of the staff are doing, to their physical detriment, and to the detriment of residents who expect, rightly so, a certain level of service is something that we should continue to focus on.