Tiny Sacramento Delta city is on brink of financial collapse. Is there time to save it?
The small city of Isleton is in rough financial shape and may be headed towards bankruptcy or insolvency.
“In a word, extremely dire,” Adam Cox said in a phone interview.
Isleton, the historic town with a population of less than 1,000 along the Sacramento River Delta, recently hired Cox to help sort out its financial quagmire. He’s part of Sectaris Partners, a private firm that works with local governments and public agencies to address crises.
It was revealed at this week’s city council meeting that Isleton’s coffers may run out of cash in the next three to five months, which led to the unanimous vote by the council to lay off the city’s paid firefighters, the assistant city manager, the accounts payable clerk and the city building inspector.
If the financial situation can’t get resolved, city officials said at the council meeting, bankruptcy might be the next step.
“So right now, we’re still trying to get a picture of what the city’s full debt load is, how many millions of dollars,” Cox said. “It’s looking like, at bare minimum, what we know of now is at least $3 million in debt.”
Tuesday’s council meeting came just days after Cox and cohort Joe Kennedy were named interim city managers.
“The city is facing an existential crisis,” Cox continued. “And by that I mean, literally, can the city continue functioning as a city? Can it continue existing?”
Isleton is roughly 36 miles south of downtown Sacramento. It’s minutes east of Rio Vista and the convergence of the Cache Slough, Steamboat Slough and Sacramento River. The city has a population of roughly 800 people and was known for its canneries to supplement the surrounding agricultural suppliers, but have since closed. It’s also known for an annual crawdad festival each summer that draws tourists by the thousands.
City officials say the financial issues go back a decade or longer thanks in part to murky bookkeeping and not keeping up with the city’s debt obligations.
“So all the years of this, of neglect, of paying bills and respecting financial arrangements — the gig is up, so to speak,” Mayor Iva Walton said.
The council recently enlisted Cox, Kennedy and certified public accountant Jessica Bigby to sift through financial records to paint a complete picture of where the city stands.
“The biggest challenge that we have right now is completely incomplete financial records,” Cox said. “There’s been nothing entered into the city’s book for about a year. No transaction, no deposit. We’re basically working off bank statements with tax balances, which really doesn’t tell us a lot.”
Poor recordkeeping, or something worse?
The situation has left officials to wonder whether foul play might be involved from former city officials and city managers. When the new city council was officially sworn in last month, former city manager Uyiosa Felix Oviawe and six other staffers abruptly left their posts.
Cox said the Sacramento County Sheriff’s Office, district attorney’s office and civil grand jury will be invited to look at the findings.
“Innocent or guilty, it kind of depends on who was in charge at the time something happened, and that’s typical, and that requires an investigation,” said David Kent, a council member and Isleton’s vice mayor. “There’s no way to tell, at this point, why the CPA is having trouble recovering the ledger. That’s nothing a council member ever wants to hear.”
Kent said the city’s fate could depend on how its financial status is viewed by the county, the state and the city’s creditors.
“Do they want and care about this community’s survival?” Kent said. “This is a heritage area. This has rich and notable history. It’s beautiful land. And a lot of the purview of what government has to deal with is land use. This is beautiful land to use, and it is renowned in the state of California, beyond its size.
“... Isleton pulls more than its weight in terms of being an attractive and noteworthy community here. So if that sentiments exists, we’ll all find a way.”
What happens if Isleton loses city status?
The city becoming insolvent could lead to getting absorbed by Sacramento County, which would mean it would lose much of its independence and force residents to rely on the county for infrastructure needs and public services.
The city shut down its police department in 2012 due to a lack of revenue after being hit hard by the recession in 2007. The Sheriff’s Office is now responsible for law enforcement in the city.
“It’s a lot of public safety and a lot of infrastructure stuff that people might no longer be able to go down to City Hall and discuss with someone in person,” Cox said. “They might need to call Sacramento or go to Sacramento.”
That process has already begun. After laying off its paid firefighters Tuesday, Isleton will hold a vote in two weeks to determine if the city will outsource its firefighting service to the River Delta Fire District, which is nearly 2 miles outside of Isleton. The city is also considering adopting a volunteer model for its local fire department.
There have been substantial fires in and around Isleton in recent years, including the historic Moore’s Riverboat Restaurant being destroyed by arson in 2022, and in 2021 when a blaze burned 42 structures and displaced as many as 150 residents at the Rancho Marina Mobile Home & RV Park. The Isleton Fire Department assisted the River Delta Fire District, which was the lead agency on both blazes.
Despite the circumstances, Walton is remaining positive thanks largely to her belief in the team assembled to find a way out of the situation.
“We’re in a phase right now where we actually are headed in the right direction,” Walton said. “I’m positive of it. It’s severe, it’s not fun, but I think it’s the only chance we have of surviving and maintaining ourself as a sovereign city, which is what we really want. The majority of people who live in town, that’s what they want is for us to maintain sovereignty as a small, unique city.”
This story was originally published January 24, 2025 at 5:00 AM.
CORRECTION: A previous version of this story inaccurately stated which fire department was the lead agency on two fires near Isleton.
