Redding City Council Special Meeting to be held Wednesday, October 22nd, starting at 4 p.m. to address questions raised by Council Member Audette

Shifting Narratives by City Manager at Budget Workshop Meeting in March 2025

It was on March 13th of this year, during the second budget workshop, when Tenessa Audette, City Council Member, first noticed that the narrative about budget projection shortfalls kept shifting. City Manager Barry Tippin, at that time, was speaking to the Council about a $4 million gap in the Fiscal Year 2025-2026 budget, which suddenly changed to an $8 million gap. Mr. Tippin was making claims that the only place the City increased staff since 2004 were in utilities, police and fire services. Mr. Tippin, at the budget workshop meeting of March 13, 2025, claimed “if cuts weren’t made in police or fire, there are no other places to go; we are bare bones everywhere else.” Ms. Audette began asking questions during budget workshop sessions and through emails but received no clear answers. She also wondered why the ending 4th quarter cash balances did not match with the following year’s beginning cash balances. She was prevented from asking questions during the council meeting when the budget was approved by a vote of 4 – 1.

Tennesa Audette Does Her Own Investigation and Prepares a Detailed Report

Based on the above occurrences in March, Ms. Audette began her own investigation into what has been happening with the City’s budget from 2019 – 2025 by looking at financial statements, staff reports, audits, and speaking with former finance staff, government officials and subject matter experts. What she found during her 5-month investigation was detailed in a 153-page report which she has made available to the public through her website: www.TenessaAudette.com. Her report includes budget spreadsheets, links to city documents, and video clips.

Unrealistic Forecasts Were Made for Sales and TOT Revenues

It appears that the large gap in the City’s 10-year budget was caused mainly by unrealistic forecasts made in 2022 by the city staff concerning sales tax and transient occupancy tax revenues, which inflated revenues by $65 million and were relied on to justify increased expenses for new staff and large raises. Those inflated revenue forecasts were based on an increase in sales tax revenues in 2021 which were known to be a one-time occurrence due to coming out of the COVID-19 pandemic with its subsequent receipt of true-up tax revenues from the prior year. Even though the source of the increased revenues was known by the City staff and City Manager to be an exceptional occurrence, staff used this anomaly to go to the City Council and ask for a revised 2021-2023 Biennial Budget, increasing sales tax revenue forecasts by approximately 13% and Transient Occupancy Tax (TOT) by 34% across the entire 10-year plan. The Council voted on this revised budget in March of 2022 without scrutinizing the numbers. Shortly thereafter, when revenues were not meeting the budget forecast, staff did not revise projections for nearly two years, which resulted in over $8 million in revenue shortfalls accumulated in just 3 years. These shortfalls have been coming out of the City’s reserves (cash) which should have been kept to 10% of the budget, but which have been allowed to dip to 7.2%.

Police and Fire Departments Received Temporary Government Grants

The City’s police and fire department budget has been supplemented with government grants that are expiring. For example, the American Rescue Plan Act (ARPA) funding of $17,593,440 was put into the City’s general fund in 2021 and 2022 and was used across various departments, including police and fire. Now, the city staff are recommending cuts to the police and fire department budgets.

City Staffing Increased Dramatically in Almost All Departments Over the Last Few Years

– Contrary to Claims Made by the City Manager

Ms. Audette discovered that over 150 positions were added since 2021 across every department. A memo from Director of Finance/City Treasurer Gregory Robinett of March 20, 2025, to Barry Tippin indicated that staff positions increased by 157 between 2021 and 2024. As a comparison, Ms. Audette states in her report that there were 767 full-time employees in 2011, and that number stayed about the same through 2018. In 2019, the number of city-wide full-time staff increased dramatically to 812 and since that time, the number of full-time employees has continued to increase. As of the end of Fiscal Year 2024, the number of full-time budgeted positions was 918. On page 74 of the City’s Biennial Budget, a chart shows that 956 positions are adopted for fiscal year 2026-2027, with 26 positions being decreased in the police and fire departments and 13 positions being added to community services and public works. Therefore, Mr. Tippin’s claim that the other departments are “bare bones” appears to be misleading and he seems to be targeting only the police and fire departments for major cuts.

Very Large Raises Were Given to City Employees While Relying on Inflated Revenue Projections

Since 2020, general fund personnel costs have risen over 35%, with all bargaining units and unrepresented city staff seeing raises over 20%, on average, since 2021. The City Manager, himself, went from a $220,000 per year salary to $336,000 per year from 2021-2024 and the public was not informed with a separately agendized item in Council meetings occurring in 2022 and 2023. The IT Director was given a new title of Chief Information Officer and received a 72% salary increase. Increases for all City executives’ salaries averaged 44% during this time frame and, as a direct result of these major salary increases and adding the additional staff, the aggregate net pension liability for the City has increased by over $46 million.

City Council Members Relied on Incomplete Information Provided by the City Manager

Council Member, Dr. Paul Dhanuka, stated on the “Jefferson State of Mine” radio show of August 17th, that he immediately saw that the forecasted sales tax revenue projections in the most current budget were inflated and needed to be more realistic and he has also stated that he has no doubts about the integrity of Ms. Audette. Dr. Dhanuka voted for the budget because he stated that it needed to be adopted so personnel could be paid. Services provided by the city would be imperiled if the budget was not passed. He says he wishes to use conservative revenue projections going forward and will look for ways to reduce City spending. Dr. Dhanuka was seated on the Council in December of 2024, while Ms. Audette has been on the Council since December of 2022. Ms. Audette has stated she regrets her prior decisions in approving the past budgets and salary increases but says she was relying on the information provided by the City Manager at that time.

Financial Reporting by the City Needs Improvement

Ms. Audette points out that under the former Finance Director, Dennice Maxwell, who retired in December of 2018, there was more transparency in the budget process with more timely quarterly budget-to-actual reports, quarterly reports that disclosed carryover amounts, amended budgets being shown on columns of reports to compare to originally adopted budgets, and actual cash balances rather than forecasted cash balances being disclosed to the Council. Currently, the city is using a new accounting system called Oracle and staff is telling Ms. Audette that the new system does not produce these reports. This excuse seems implausible since most accounting systems should be able to generate these standard reports. Another problem with the way things are being handled at the City is that the City Treasurer role has been combined with the City Finance Director position, eliminating a key component in financial oversight. The current City Finance Director has been quoted as saying “The beginning Cash Balance is merely an estimate to be adjusted mid-year once more information is available.” This appears to go against California Government Code 53646 that requires municipalities to report regularly on investment activities, cash management practices, and fund balances. Prior to September 2023, cash reports were given monthly to the Council Members. Now, those reports are no longer available to the Council Members. There have been major delays in producing other reports for the Council Members, such as the master pay schedule, which Tenessa says wasn't produced for 23 months.

Accountability and Changes Needed

Ms. Audette would like accountability in the budget process and has requested some changes to establish more oversight and timely and transparent reporting. She is also asking for the City Manager to be dismissed for cause (due to deception) and for the staffing of all departments to be returned to pre-2023 levels. Mr. Tippin has been planning to retire in October, leaving the city taxpayers and Council to deal with the current budget deficit. He has been in the position of City Manager since 2017 and worked as the Assistant City Manager since 2008. There are numerous discrepancies in the budget reports that should be further investigated, and some people are calling for a forensic audit to be conducted.

Former Finance Director Maxwell Agrees That There is a Lack of Transparency

Ms. Audette has been meeting with the retired Redding City Finance Director, Dennice Maxwell, who is a Certified Public Accountant, to gain perspective on the situation that she has uncovered with regard to the way the budget has been presented in the last few years. Ms. Maxwell appeared recently on a "Tenessa Talks" podcast (available on Youtube), to explain how things were done in the past while she was running the Finance Department and she stated that she agrees with Tenessa that for the last few years, there has been a profound lack of transparency and a lack of adherance to standard accounting practices. For example, the current Finance Director, Robinett, is combining accounts receivable with actual cash on hand in the budget reports, which is not the way it should be done. She also stated that the amount of raises that were given in such a short time period are unsustainable. Ms. Maxwell said that when she was working for the City, there were many years that no raises were given, not even Cost-of-Living Adjustments (COLA). She also stated that because City employees receive a defined benefit plan pension, which is no longer economically feasible for most companies, City employees are willing to work without the increases in pay each year. When there were budget deficits, they were reported promptly and measures were taken to balance the budget within the next cycle. The initiative that is going to the voters to raise the sales tax by 1% is not a good idea in her opinion because she is worried about how transparent the City will be with the increased sales tax dollars.

Other City Council Members Not Questioning the Narrative

Council Members Erin Resner, Dr. Paul Dhanuka, Mike Littau, and Jack Munns (Mayor) have not questioned the City Manager or City Finance Director publicly about the discrepancies highlighted in Tenessa's report. At the September 16th City Council meeting, a presentation was made by the City's Public Works' Street Division about the poor condition of the majority of the City's roads. To address this unmet road maintenance need, Tippin presented two hypothetical options for redirecting $10 million annually from the general fund to street maintenance and both options involve cutting the budgets of the police, fire, and community services. During that same meeting, the Council adopted a resolution honoring Tippin's 21 years of dedicated service to the City, with Mayor Munns commenting that "Barry Tippin has a legacy that will shape this city for generations." Mike Littau stated "I firmly believe the City is better today than it was when he took over....We are incredibly grateful for your leadership." Erin Resner commented that "I really, really have valued your insight and knowledge of every single department. Thank you for your honesty and candor." Also, Mayor Munns did a special presentation for City Manager Tippin at the September 23th Redding Chamber of Commerce State of the City event at the Redding Civic Auditorium, honoring Tippin's service to the City.

The City Finance Department will be responding to the questions raised by Ms. Audette at a special meeting to be held on Wednesday, October 22nd, starting at 4 p.m., at the Redding City Council Chambers, 777 Cypress Avenue, Redding, CA 96001. (Doors open 30 minutes prior.)

Compensation to City Council Members is Not in Line with California Government Code

The City Council Members are receiving $600 per month in compensation, yet are tasked with oversight of a very large City budget involving hundreds of millions of dollars. California Government Code Section 36516 recommends that City Councils enact an ordinance providing that each member of the city council receive a salary based on the population of the city as set forth in paragraph (2)(d) which provides that cities of over 75,000 to 150,000 in population receive up to and including $1900 per month. A city council member may waive any or all of the compensation permitted by this section of the government code.