Editorial: Audit catch-up shows Novato on right track

When Novato voters in 2024 overwhelmingly approved the Measure M sales tax increase, they wanted the city to finally get its financial act in order.

For many years, Novato’s budget has been a fiscal rollercoaster ride. Even the sales tax from Vintage Oaks, one of Marin’s busiest shopping centers, and rising property values haven’t settled Novato’s finances. Add to that recent upheaval in the leadership of City Hall’s finance office.

The latter led to the city failing to follow best practices by completing an annual public audit of its ledgers.

Audits may not be the easiest documents to read. They are mostly dense dollars-and-cents fiscal accounts, but they often pinpoint business operations that could use attention and change.

Keeping City Hall’s promise to voters, the council recently brought its audits up to date. The 2024-25 fiscal year audit found no significant errors or areas of concern.

That’s particularly good news after previous audits cited fiscal weaknesses and compliance issues.

It is the first current city audit completed on time since 2017.

Particularly troubling was council members’ acceptance that the independent audits were being delayed. If they were concerned, they didn’t raise it publicly to the level that taxpayers were aware of the problem.

It took a Marin County Civil Grand Jury probe of the city’s books to bring the absence of the audits to public attention.

The attention was important in winning voter approval of Measure M.

City voters wanted to finally right Novato’s fiscal ship, even if it meant making the sales tax increase a “forever” tax, without the expiration date or, as is found in many local taxes, a requirement to have it renewed by voters.

Now it’s up to the City Council to keep its promise.

Recent reports that the city’s finances are healthy and stable are not enough.

The City Council needs to make short- and long-term budgetary decisions aimed at keeping it that way.

Bringing its audits up to date and addressing issues raised in those annual evaluations lay a strong foundation to meet that goal.

At a recent council meeting, Mayor Rachel Farac asked what systems are in place to help prevent the city from repeating its problems.

City staff say it has developed a checklist aimed to keep the city on a sound fiscal tract.

Carla Carvalho-DeGraff, the city’s finance director, called the new audit “celebratory.”

She’s right. Playing catch-up in pulling together annual facts and figures – especially given turnover in the city’s finance leadership – can be arduous, if not incomplete. Postponing audits is risky business and a sign of financial instability.

In making budgetary decisions, city councils and staff need to know they are working with reliably accurate financial figures. The audits evaluate the annual baseline – an accurate reporting of the city’s revenue, spending and holding of millions in taxpayer dollars over dozens of accounts – that provides a stronger foundation for those decisions.

The catch-up work started before passage of Measure M with the city completing six audits since 2023. That work was complicated by staff turnover and vacancies, budgetary balances that had been carried forward for many years without regular review and accounting errors from prior years.

Staying current with audits should be a fiscal priority for any public agency. They aren’t sexy, but rather tedious nuts-and-bolts fiscal management.

Mayor Farac is right to ask what strategies are in place to help make sure Novato doesn’t slide back into its past practice.

The answer she got from city staff is reassuring. It is council members’ responsibility to make sure staff stays on track. Taxpayers who voted to raise their taxes to fix Novato’s finances, should expect no less.