Willits Finance Director Outlines Years of Financial Turmoil as the City Declares a Fiscal Emergency
COVID money combined with disorganized financials and a toxic workplace led the small city to the brink of insolvency
Various typos fixed 3/18/2026 3:42 p.m.
The Willits City Council voted unanimously last week to declare a fiscal emergency that includes laying off seven employees, cutting eleven open positions, and consolidating building, planning, public works, water, and waste water management into one department.
But first, Manuel Orozco, the finance director who was tasked with bringing order to the city’s disjointed accounting and payroll data broke his silence.
For four years, Orozco said, he operated under what he described as a strict policy of working behind the scenes to reconcile the books of a city whose financial records were in such disarray they resembled a “disaster.”
A City Run on Small Business Software
When Orozco arrived in January 2022, the City Manager Brian Bender welcomed him “as a wonderful asset to the organization.”
What Orozco found was chaos. He testified at the March 9 meeting that Willits had no formal finance department. The city was two years behind on its audit books and was utilizing payroll software designed for small businesses rather than a municipality.
“The ACS system held no payroll expenses,” Orozco said, describing the manual effort he undertook to rebuild the city’s financial history from scratch.
To align the city’s old records with its new financial software, Springbrook, Orozco said he had to replicate daily utility billing and cash receipting through more than 3,500 separate journal entries. Despite the backlog, he completed five audits during his tenure.
The Hidden Hole in the Budget
In January 2022, the city had a $1.9 million surplus, thanks to an influx in funding from the federal CARES Act money that was supposed to be used for pandemic-related expenses.
The surplus made Willits feel flush. At the same city council meeting where Bender welcomed Orozco, he also announced new positions in community development, dispatch, and public works.
By the next year, the surplus had dwindled to just $400,000.
Financial consultant Andy Heath noted that once this federal aid stopped, the underlying structural deficit became visible.
Retaliating Against a Voice of Concern
For Orozco, the turning point came in late summer 2023 when he raised alarms over the city’s spending. He specifically challenged a plan to pay $800,000 for outside engineering services to avoid a single $200,000 in-house hire—a decision he cited as emblematic of the era’s financial thinking.
Orozco claimed the response to his concerns was swift and punitive: the finance department was split in two. The “front-end” operations were placed under the assistant city manager, while Orozco was relegated to the “back-half”.
From that point on, Orozco testified that his efforts to implement internal controls were systematically dismantled. He told the council he was overruled on critical utility billing procedures and watched as documentation for cash receipting was “tossed away” over his objections. He was also placed on administrative leave for several months.
The failure of oversight, Orozco claimed, led directly to the city receiving a “qualified” audit opinion — a red flag to lenders and the public that a city’s financial statements may not be fully accurate.
A Culture of Fear
Orozco’s testimony painted a picture of a workplace defined by professional and personal strain. He claimed he was forced to follow the city manager’s lead regardless of his professional disagreement and faced attacks from a past council member on social media.
“I’ve heard of a lot of Monday morning quarterbacking” on what people would have done differently, Orozco said. “It’s easy to state these things in the comfort of a protected space. But I had no such luxury.”
Even within the council chambers, Orozco said he was recently “stared down” by the former council member in an attempt to intimidate him.
A Toxic Culture Documented by a Civil Grand Jury
Orozco’s account is backed up by testimony gathered by the Mendocino County Civil Grand Jury and published in a report last year “Healing the Toxic Culture in the City of Willits Workplace.”
The grand jury found that “top management ignored the policy in the City of Willits Personnel Policies and Procedures Manual regarding harassment, discrimination and retaliation” according to the employees they spoke with.
The grand jury reported cited multiple examples of employee testimony, including:
Top management placed themselves as acting Finance Director and Human Resources Director positions for which employees believed they had no experience or qualifications to do the jobs responsibly.
Complaints were “squashed” instead of heard, investigated, and addressed.
Employees state that the leadership is fear-based. This causes disruptions and frustrations, taking away the ability to perform duties to the fullest.
The Final Word
Orosco’s experience mirrors the challenges described by financial expert Mark Moses, who notes in The Municipal Financial Crisis that finance directors are often relegated to subordinate roles, tasked with “making the budget work” for predetermined political spending rather than acting as a true fiscal safety net.
As he prepares to leave the city, Orozco said he is finalizing the last of the bank reconciliations and cleaning up the final issues carried over from the previous administration.
“I leave it better than I had when I arrived,” Orozco told the council as they prepared to vote on a radical reorganization plan that included his own layoff. “That’s why you have numbers now.”