Langley's financial reports show a healthy cash balance, yet the underlying accounting data exposes significant issues with record-keeping, staff retention, and malfunctioning financial software.

The city's total cash and investment holdings grew substantially over two years, reaching $13,035,914 by the close of 2023 and rising further to $14,979,154 by the end of 2024. However, a deeper examination of how these funds are tracked and reported reveals severe operational vulnerabilities.

A Million-Dollar Misstatement

Despite the strong cash position, state reviewers have classified the city's internal accounting controls as a "material weakness."

The core issue stems from how the city tracks its utility money. Langley uses separate operations and capital funds for each of its utilities. When money was moved internally between these different utility accounts, the city’s software automatically rolled the transactions up without staff manually backing them out.

As a result, basic internal transfers were falsely published as brand-new revenues and brand-new expenditures.

This bookkeeping failure created a massive illusion on paper. The City overstated its revenues and expenditures by $678,750 in 2023, and by another $452,500 in 2024.

While this million-dollar misstatement did not actually change the amount of real cash in the bank—the money was just counted twice—it crippled the City’s ability to produce reliable, transparent financial data for the public and the City Council.

To fix this moving forward, city management announced they will completely discontinue the use of these complex “managerial funds,” acknowledging they require too much staff time and introduce a level of complexity far beyond the city’s actual needs.

Busted Budgets and a Revolving Door at City Hall

City records paint a stark picture of a municipal government paralyzed by constant staff turnover and what officials bluntly described as “organizational turbulence.”

This instability had direct, tangible consequences on the city’s ability to adhere to its own spending limits. In 2024, two specific city funds blew past their legally adopted budgets.

The Capital Reserve Fund was authorized to spend $75,000, but ultimately burned through $161,110—an overrun of more than $86,000.

Similarly, the Public Works Vehicle Replacement Fund exceeded its $30,000 budget by over $7,000.

The city has attributed these overruns to a lack of structured oversight and spending controls, driven by a staggering wave of departures in key administrative roles.

Throughout 2024, Langley’s front office became a revolving door:

  • January 2024: A newly hired City Administrator left their position, and the role remained unfilled.
  • June 2024: The Accounting Assistant departed and was replaced by an individual with no prior municipal experience.
  • October 2024: The Finance Director left employment.

While the city eventually replaced the outgoing Finance Director in late 2024 with a candidate who possessed actual municipal finance experience, the damage was deeply embedded.

The incoming director was immediately tasked with navigating “years of coding and entry errors in the software,” making accurate reporting nearly impossible.

This chaos is the culmination of a multi-year crisis; previous years saw a similar pattern of unexpected resignations and the hiring of administrators who completely lacked municipal finance experience.

A Decade of Red Flags and Corrective Actions

Langley’s ongoing financial challenges represent the latest chapter in a nearly ten-year period of fiscal difficulty. City administrators have acknowledged a consistent pattern of issues, reporting that every significant audit cycle since 2015 has resulted in findings or warnings regarding weak internal controls over financial reporting.

To address these deficiencies, the municipality is implementing a comprehensive corrective strategy. All personnel within the finance department are now mandated to undergo specific state-level accounting education. Concurrently, the city is in the process of revising its standard operating procedures to establish clearer protocols. Additionally, the Finance and Personnel Committee is receiving targeted instruction on financial statement interpretation to enhance the rigor of their monthly oversight.

Substantial Obligations and Unused Funding

While the city focuses on immediate bookkeeping improvements, it continues to manage substantial long-term financial commitments. As of the end of 2024, Langley reported total debt and liabilities amounting to $4,325,683.

The largest portion of this financial burden is attributed to voter-approved General Obligation bonds. Specifically, the city still owes $3,470,000 on bonds issued in 2020 and $137,349 on a 2014 issuance. Annual debt service payments for these instruments are projected to range between $190,000 and $200,000 through the end of the current decade.

Other notable liabilities include $386,381 designated for post-employment benefits and $239,120 in accrued vacation and sick leave compensation owed to city employees.

A particularly significant indicator of administrative hurdles is a substantial, unutilized line of credit. The city previously secured a $3,500,000 loan from the Public Works Board to support the Langley Infrastructure Project. However, according to audit records, the city had not drawn down any portion of this funding at the time of the review.

As Langley proceeds, the stabilization of its financial department remains essential not only for rectifying procedural errors but also for effectively managing the multi-million dollar capital projects and long-term debts upon which the community depends.

Further details regarding the findings issued by the Washington State Auditor are available in the full report.