When Compton Mayor Eric Perrodin asked State Controller John Chiang to perform an in-depth audit of the city’s troubled finances, he likely didn’t anticipate that his request would dry up the city’s access to the credit market. However, the words fraud and waste caused many who might have otherwise offered the city a loan to think twice about giving any more money to a city that may be illegally spending their revenues.

That made Compton’s $41 million budget deficit a tougher problem to solve. Already owing millions to the Los Angeles County Sheriff’s Office and facing a mid-year cash shortfall, the lack of the new loans will increase out-year deficits as the city will lack funds to pay all of its bills. Last year, the city accumulated $369,000 in late fees to the Sheriff’s office.

At the same time the request for an audit was issued, Compton’s interim city manager, Lamont Ewell, submitted his resignation. After publically and vocally expressing his concerns over wasteful spending and a lack of fiscal restraint, the request for an additional audit meant there wouldn’t be much more that Ewell felt he could do.

Some have accused the request for an independent audit to be a political move by the Mayor to block the reforms that Ewell has proposed.

From the Los Angeles Times:

The Compton mayor’s allegations of fraud at City Hall have at least temporarily killed the cash-strapped city’s ability to get a line of credit to pay bills and prompted the resignation this week of the interim city manager.
The city, which owes millions of dollars to the Los Angeles County Sheriff’s Department, among other debts, had been trying to get a line of credit to help deal with a $41-million deficit.

Read the full article here.