Scare Tactics, Bad Data, and the Truth About Clayton’s Finances
Independent audits and documented financial records tell a very different story than the one you’ve been sold.
For years, Clayton residents have been fed the same alarming story: the city is on the verge of financial collapse. That narrative has echoed at council meetings, in public comments, and in official reports, including coverage in the now-defunct local newspaper formerly owned by Tamara Steiner. But step away from the rhetoric and look at the actual financial records. A very different picture comes into focus.
If Clayton were truly going broke, the city’s independent auditors would be the first to say so.
“The claim that Clayton is ‘going broke’ has become a talking point — not a factual statement.”
Instead, the most recent audit shows a city that has corrected past internal control failures, strengthened financial oversight, and continues to operate with stable reserves. The narrative of crisis simply does not match the documented record.
Where the Narrative Started
The “Clayton is going broke” story has a clear origin. It emerged during the push for a $400 per-parcel tax proposal championed by former Mayor Peter Cloven, Carl Wolfe, Holly Tillman, and former City Manager Reina Schwartz. Residents were warned that without significant new taxes, the city’s financial future was in jeopardy.
That message relied on worst-case projections and fear-based framing rather than Clayton’s actual financial position. Even after the proposal failed to gain traction in a citywide survey, the crisis narrative kept circulating, that Clayton's finances were somehow in crisis.
That rhetoric continued under the next city manager, Bret Prebula, who repeated many of the same claims about Clayton’s financial condition and continued pushing the idea that the city was facing a fiscal crisis. Prebula’s tenure ultimately ended with his departure from the city after a relatively short and troubled period.
The playbook was predictable: manufacture the perception of instability, then present tax increases as the only solution, rather than doing the hard work of actually fixing the problems. The city’s audited financial records tell a different story.
What the Latest Audit Actually Shows
At the City Council meeting on March 3, 2026, the City reviewed its Annual Comprehensive Financial Report (ACFR) for the fiscal year ending June 30, 2025. The independent audit produced no surprises and no alarm bells.
The fiscal year ended with a manageable deficit that had already been anticipated and budgeted for. More significantly, auditors reported no material weaknesses or significant deficiencies in the City’s internal financial controls. That is a meaningful improvement from prior years.
From FY2020 through FY2023, auditors repeatedly flagged serious internal control problems that required corrective action. Those were legitimate concerns.
Under City Manager Reina Schwartz, the city’s books went unreconciled for roughly 18 months — and the city was defrauded of approximately $50,000.
When the fraud was uncovered, no formal investigation was ordered. Then-Mayor Peter Cloven did not pursue the matter. City management let it go. Yet some of the very individuals involved during that period continue to portray the current council majority as reckless.
With new staffing and stronger oversight, those control failures have been corrected. For the second consecutive year, auditors reported no findings. That is exactly what responsible financial management looks like.
The $350,000 Revenue Change — Context Matters
Another point routinely raised in “crisis” discussions involves the Successor Agency, which managed the wind-down of Clayton’s former Redevelopment Agency after the state eliminated redevelopment agencies in 2012. For several years, Clayton received roughly $350,000 annually from the County to administer those activities.
That work is now complete. The funding will decline and eventually disappear.
But here’s the critical context: that revenue was always temporary. It was administrative funding tied to a finite task, not a permanent source of operating income. Its decline was anticipated and built into the city’s financial projections. Calling it a crisis is a deliberate misrepresentation.
The Civil Grand Jury Issue
Another fuel source for the crisis narrative was a recent Civil Grand Jury report. Evidence has since surfaced indicating that financial information used in the complaint process was altered or misrepresented, creating a distorted picture of the city’s finances.
This is not a minor procedural matter. Under California law, submitting falsified information during an official proceeding can expose individuals to potential criminal charges. This issue is now receiving closer scrutiny.
When inaccurate financial data is used to influence an official investigation, it doesn’t just mislead — it undermines the integrity of the entire process.
Stay tuned. More information on this issue is expected to come to light in the coming months.
Leadership and Priorities
Clayton’s financial debates have also exposed a deeper question about where elected officials focus their energy.
For years, some council members devoted significant time to outside organizations, regional boards, community groups, and advocacy efforts, while key city priorities went underfunded and underattended. Some spent years engaged with organizations like ABAG or groups like CBCA, while infrastructure maintenance, long-term financial planning, and basic community upkeep were treated as afterthoughts.
Others pushed controversial development proposals like Olivia on Marsh Creek, marketed as a 55-and-over senior housing development that would supposedly generate minimal traffic and require fewer parking spaces. That claim was later discredited through research published by Clayton Watch. The reduced parking rationale leaned heavily on a study from a senior housing project in Pennsylvania, used to justify lower standards for a Clayton project that was not legally restricted to seniors.
Clayton Watch’s research exposed those inconsistencies and raised serious questions about the project’s justification. It was pushed through by a long-time council member and former mayor, Julie Pierce, who served nearly 28 years, with little clear rationale to show for it.
Serving on a city council is not a social or networking exercise. It demands consistent focus on the city itself: responsible budgeting, maintained reserves, investment in infrastructure, and careful stewardship of public resources.
The Bottom Line
The “Clayton is going broke” narrative is a political instrument, not a financial reality.
The city’s independent audit says otherwise. Clayton maintains over $7 million in reserves. Internal financial controls have been corrected. The decline of temporary redevelopment funding was planned for, not a surprise. There is no crisis, there is a manufactured story designed to drive fear and justify policy changes that never needed to happen.
The real question isn’t whether Clayton is going broke. It clearly is not.
As more information surfaces regarding the financial data submitted during the Civil Grand Jury process, the public may soon have a much clearer picture of how that narrative was constructed, and by whom. Providing false or misleading financial information in an official proceeding is not simply poor judgment. It can carry serious legal consequences.
Clayton Watch will continue to research the facts and report what the public deserves to know.
The facts are on the record. The audit speaks for itself. The residents of Clayton deserve nothing less than the truth.
