This opinion was contributed by Director-Elect, San Benito Health Care District — District 5, Roxy Montana. The opinions expressed do not necessarily represent BenitoLink or other affiliated contributors. Lea este artículo en español aqui.
At 5 p.m. on Friday, October 2, the Hollister City Council convened a specially called meeting to confront a financial emergency.
Residents and city employees gathered at City Hall to face an alarming question: How had the city reached this point?
The General Fund reportedly had only $178 available in its bank account at the end of September. Without additional cash, city officials said Hollister could not meet its upcoming payroll.
The moment had the urgency of a fire alarm.
But was the fire really new?
Or had the warning signs—the lingering smoke—been there for months, even years?
The City Council unanimously approved an $18 million loan between city funds—$11 million for the General Fund and $7 million for Water. The money is due to be repaid by June 30, 2027.
The more important question is:
When did the numbers first show that an emergency was coming?
The Warning Was Explicit by June.
Problems in the Water Fund had been developing for years.
In April, City Manager Ana Cortez reported that the Water Fund had spent about $26.4 million more than it collected over roughly the previous decade.
By June, the city’s proposed 2026–27 budget showed projected deficits of about $6.4 million in the General Fund and $10.7 million in the Water Fund—more than $17 million combined.
Those June deficit numbers are different from the October loan. The June numbers showed how much the two funds were projected to fall short.
By October, the problem had become immediate: the city was running short of cash and needed a separate $18 million loan.
On June 9, Finance Director Jessica O’Connell told the City Council:
“We are in a financial emergency here at the City of Hollister.”
That warning bell sounded nearly four months before the October 2 emergency meeting.
The Proposed Solution Was Borrowing
With those deficits already known, the city turned to borrowing money from its own funds.
During June, officials considered using money from the Sewer Fund to help the General and Water funds. One proposal called for about $22.8 million—$5.5 million for the General Fund and $17.3 million for Water.
A different plan involving about $20 million from Sewer was later approved as part of the budget process.
City management described the Sewer Fund as serving as a “line of credit” for other city operations.
But there was another serious problem.
The city did not have current audited financial statements and bank reconciliations. By October, city documents acknowledged that these important financial records had not been completed since fiscal year 2021–22.
How is it possible that elected officials could have made informed decisions about millions of dollars in borrowing when the financial records they were relying upon were years behind?
Then the Borrowing Plan Disappeared
The June Sewer Fund solution did not go forward as originally planned.
On September 9, the council canceled an earlier Sewer-to-General-Fund loan resolution. The Finance Department reported that the loan directed in June had never been carried out.
That deserves attention.
The city had entered the fiscal year relying on borrowing between its own funds to provide cash. By September, an important part of that plan was no longer available.
Less than a month later, the council held the October 2 special meeting and approved a different $18 million loan, this time using Impact Fee funds.
That raises another question:
When the June financing plan failed, when did the council understand that its financial bridge was gone—and what did it do about it?
What Happened Between June and October?
These facts do not establish misconduct by any individual, nor do they prove that Hollister’s October emergency could have been completely avoided.
They do establish that the emergency had a history.
By June, large deficits were known.
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By June, the finance director was publicly using the words “financial emergency.”
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By June, the city was considering millions of dollars in borrowing between its own funds.
And yet, the city was making major financial decisions while important audits and bank reconciliations remained unfinished.
By September, a major part of the borrowing plan had not been carried out and was canceled.
On October 2, the situation became an immediate cash emergency.
At that meeting, I reminded the council of something my father—a rocket scientist—taught me many years ago: Every major decision we make ultimately comes down to understanding the numbers.
For me, that means living the numbers—staying with them until they make sense.
Elected officials do not have to be accountants. But they do have to recognize warning signs, know which questions to ask, and keep asking until they understand the numbers well enough to find a path toward solutions.
So perhaps Hollister should now answer four questions:
Firstly: When did the numbers show that the city was approaching a cash crisis?
Secondly: Who knew, and when did they know it?
Thirdly: When borrowing between city funds was proposed, what specific source of repayment was identified?
And lastly: What happened between the June warning and the October 2 emergency?
Those questions are not about assigning blame.
They are about accountability, forecasting, and making sure financial warning signs are recognized, rigorously questioned, and addressed before they become emergencies.
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