Stockton Vice Mayor Jason Lee has sent a written request to the California State Controller’s Office, asking the state controller to conduct a comprehensive audit of the city.
In Lee’s formal letter to the state controller’s office dated Thursday, Nov. 13, the vice mayor said his request is “based on serious concerns regarding the city’s fiscal stability, compliance with established laws and policies and a breakdown in internal controls that collectively place the city at risk of a renewed fiscal crisis.”
Lee referenced Stockton City Council’s unanimous vote Wednesday, Nov. 12, to forward misconduct allegations involving former Interim City Manager Steve Colangelo to the California Attorney General’s Office, San Joaquin County District Attorney’s Office and San Joaquin County Civil Grand Jury for independent review. He said the council’s vote reflected “the city’s acknowledgement of the seriousness of these matters and underscores the need for parallel fiscal oversight from the state controller’s office.”
Bismarck Obando, press secretary for the Office of State Controller Malia M. Cohen, confirmed Monday, Nov. 17, that the office received Lee’s letter.
“The controller is currently reviewing Vice Mayor Lee’s request and will make a decision in the near future,” Obando said.
Mayor Christina Fugazi’s office declined to comment on whether she supports a city audit or shares the vice mayor’s concerns about the city’s financial oversight and staffing in key fiscal positions. The office also declined to discuss steps being taken to address governance or internal control issues.
A city without ‘qualified financial leadership’
Stockton has operated for more than a year without a chief financial officer or director of procurement, and two assistant CFO positions remain vacant, Lee said. The city’s budget officer stepped down after alleging harassment by the former interim city manager, and the independent external auditor ended its engagement with the city in May, Lee added.
“These vacancies have left Stockton without qualified financial leadership, comparable to a bank with the back door left open and no one watching it,” Lee said.
Lee highlighted several issues the Council Audit Committee has taken up. These include the dissolution of the Office of Performance and Data Analytics and the creation of the Office of Public Transparency, Information and Communication without council approval. He also said funds allocated for diversity, equity and inclusion programs were redirected without authorization for a consulting contract Colangelo entered into with Lathrop City Manager Stephen Salvatore despite staff objections.
Lee pointed to internal reviews showing hundreds of thousands of dollars in payroll errors and overpayments within the administrative services department. He also noted several positions that were created and filled without open recruitment, often by individuals with personal ties to the former interim city manager and paid at the top of the range despite staff recommendations.
Despite multiple requests from the Council Audit Committee, the vice mayor said the matters have not been prioritized for council action. He also said that “chronic vacancies, lack of qualified oversight and diminished institutional knowledge” at city hall have made it difficult for councilmembers to obtain accurate and consistent information.
“Stockton’s residents deserve honest, transparent and accountable governance,” Lee said. “As vice mayor and chair of the audit committee, I have exhausted local remedies and now seek the assistance of the controller’s office to help identify, correct and prevent further fiscal and ethical misconduct.”
Stockton’s history with the California State Controller’s Office
The request follows past audits. Stockton has a long history with the California State Controller’s Office, which previously audited the city for major internal control problems.
A 2010-2011 review of Stockton’s administrative and accounting controls found significant weaknesses, warning of a high risk of waste, fraud or abuse. Among the issues cited were improper pooling of gas tax funds, $1.3 million in redevelopment money held unlawfully and mismanagement that led to the loss of $8.6 million in state and federal grants.
Those structural problems contributed to Stockton’s 2012 municipal bankruptcy, with the state controller at the time noting that better accounting and oversight could have mitigated the fiscal crisis.
More recently, Stockton has faced ongoing issues, including over 5,000 payroll errors since 2023, costing the city more than $1.6 million in retroactive payments and penalties. Audit reports continue to flag internal control deficiencies, and key financial oversight positions remain unfilled.
Record reporter Hannah Workman covers news in Stockton and San Joaquin County. She can be reached at hworkman@recordnet.com or on Twitter @byhannahworkman. Support local news, subscribe to The Stockton Record at https://www.recordnet.com/subscribenow.
This article originally appeared on The Record: Stockton vice mayor asks California controller for fiscal audit of city
Reporting by Hannah Workman, The Stockton Record / The Record
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