When I was a kid, my grandparents retired not to Miami or Palm Springs as many retirees do – rather, but rather the city of Hollister, about 45 minutes of San José.
Known as the unofficial “earthquake capital of the world,” the home of the famous Casa de Fruta fruit stand and host to a massive annual motorcycle rally, Hollister was a charming small ag town that grew into a Silicon Valley bedroom community.
Now it is the financial mismanagement capital of California.
The city declared a “state of financial emergency” this month upon reporting the that the city of roughly 44,000 residents had a just $178 in its general fund.
City manager Ana Cortez told the city council that, “we have no way of meeting our payroll because we do not have funds in the general fund to pay people.”
At the meeting, the council authorized an $18 million interfund loan to meet expenses and took a host of other cost saving actions including announcing layoffs. Not surprisingly, public employee unions went berserk.
Then things took an unexpected twist.
Councilmembers reversed course, cancelled the fiscal emergency and asked city employees to return to the negotiating table, according to the Hollister Free Lance. This occurred after a profanity-laden council meeting filled with finger-pointing, public shouting, and many “purple shirt” wearing union members in the audience.
Astonishingly, the city council in a 3-2 vote on Wednesday night fired the city manager – one of the only officials seemingly acting in a fiscally responsible manner – which unions have demanded.
So, how did things get this bad? A mix of poor spending decisions and lack of oversight and auditing are the main culprits.
Part of the crisis comes from years of overspending by the city’s water department, which overspent its budget by a whopping $26 million over the past decade according to the city manager’s office, and facing another $3.6 million deficit this fiscal year. The city general fund subsidized the water department for years, unsustainably. Now, ratepayers are paying a 30 percent water rate increase enacted in February – with another increase in June coming soon.
Then there’s the city’s reckless accounting practices.
BenitoLink reported in January that the city has been years behind in completing financial audits, and Cortez told councilmembers this month, “[the city has] not reconciled our bank accounts for four years . . . for the last four years, we have not balanced our checking book.”
Worse, city Finance Director Jessica O’Connell told councilmembers that past officials used restricted funds for general fund spending – “which is a crime . . . it’s illegal.”
Then there’s Hollister unsustainable public employee pay and pensions – a dilemma faced by many other cities.
Hollister owes nearly $4.1 million in unfunded public pension obligations to CalPERS, which the state controller’s office shows its retirement and health contributions have more than doubled from $3.6 million in 2015 to over $8.2 million in 2024. Total wages paid to city employees grew from $13.1 million in 2016 to $27.8 million in 2025 as the number of city employees declined.
Cortez’s firing shows that councilmembers have their priorities wrong – going after the one official telling the uncomfortable truth rather than facing up to the hard truth about the city’s fiscal recklessness.
Going forward, it’s no surprise that taxpayers will be asked to pay for the city’s financial mess.
City officials plan to ask Sacramento lawmakers to allow the city to place a 1 percent sales tax increase before voters. The city generates about $9 million annually from another 1 percent tax – Measure W – so expect a similar-sized tax hike if voters agree.
Curiously silent in the whole affair is the legislator who represents Hollister – Assembly Speaker Robert Rivas. Will Rivas go along on behalf of his public employee union allies and push for a local tax increase or – worse – a state bailout?
Cortez’s firing shows that whatever path the city and state officials take here, local taxpayers will be paying more, and the status quo will likely go on at City Hall.
Tim Anaya is the Pacific Research Institute’s vice president of marketing and communications and co-author of The California Left Coast Survivor’s Guide.