It was the $60 million plus October surprise.

Four years ago less than two weeks before a 2020 ballot measure vote to double the Manteca sales tax, then City Manager Miranda Lutzow dropped a bombshell.

The finance department couldn’t properly account for more than $60 million in the city budget.

Lutzow was clear: There was no malfeasance suspected.

She also did not want a lid put on top of the unearthing of financial disarray with less than two weeks before the election.

So 10 days before the election she went public just two days after a consultant delivered the bad news to the senior management team.

Measure Z ended up being narrowly defeated by !,221 votes.

Fast forward Monday to almost four years to the day Lutzow made her announcement. The city was able to assure the public that all of the I’s had been dotted and the T’s crossed in bringing a backlog of fiscal year audits current.

Auditors gave the city a clean bill of health.

They also noted the city for the past several years has been following best practices when it came to municipal finances.

All inter-fund borrowing has been properly recorded and has been paid back — or is in the process of being repaid.

The news during Monday’s special meeting garnered praise from Charlie Halford, arguably the council’s biggest stickler for tight oversight of municipal finances.

“There is no money missing,” Halford said. “No signs of fraud or waste.”

Councilman Dave Breitenbucher noted the city has come a long way from October 2020 when elected officials were told $67 million in city funds weren’t properly accounted for.

What followed was the revelation that high turnover, short staffing, and people in positions above their skill levels in the finance department had failed to keep the city’s general ledger current.

At the same time, individual departments took it upon themselves to keep track of their department expenditures on their own “ledgers” so they would have an idea of where they were at.

Not only were audit reports no longer timely but they had fallen several years behind.

The unraveling of the mess revealed projects being recorded twice for the full cost in multiple budget years, money was budgeted for specific projects but never spent, and similar issues.

A grand jury inquiry determined there was no signs of malfeasance or fraud, but confirmed the city’s finance department was a hot mess.

Four years ago, the then recently christened deputy city manager who came up through the parks and recreation department, was put in charge of temporarily overseeing finance while the city searched for someone to lead the department in a bid to straighten out the mess.

That deputy city manager, Toni Lundgren, is now the city manager.

Shay Narayan, the finance director she hired, working with a revamped staff and auditors was able to deliver not one but three annual audit reports since August of 2023.

It was, in paraphrasing Narayan’s words, a feat that is likely unparalleled among municipalities

The bottom-line is two-fold.

City residents are now assured that everything is in order when it comes to Manteca properly accounting for municipal funds and expenditures.

At the same time, the city knows exactly where they are at financially.

“We know the real numbers,” Councilman Jose Nuno said.

That means going forward elected leaders at the mid-year budget review that is the prelude for establishing spending plans for the upcoming budget can make longer-range spending plans without worrying whether the numbers are accurate.

And because two of the three annual audits  were completed before July, the council was able to move forward with asking for a limited 20-year three quarter of a cent tax increase on the Nov. 5 ballot knowing what the real numbers were and they could tell the voters there was no doubt where the city stood financially.

That said, even though the current budget is balanced, the audits show general fund expenses outpacing general fund revenue. That means the budget is being back filled by reserves which, if the trend continues, would eventually be depleted.

It also showed that two standalone accounts — enterprises funds separate from the general fund — are in a financial hole.

The water operating and maintenance fund is $23 million in the hole and the wastewater fund that covers day-to-day is almost $30 million in the hole.

That is the direct result of the city not raising rates for water and sewer services for 14 years and counting.

To contact Dennis Wyatt, email dwyatt@mantecabulletin.com