Sausalito Grapples with Budget Overruns, Rejects Forensic Audit

City manager details internal turmoil and cybersecurity issues that led to $1.4 million in overspending

Apr. 9, 2026 at 9:57pm

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A fractured, abstract painting in shades of blue, grey, and green depicting an indistinct government building or office, with overlapping, repeating geometric shapes and lines conveying a sense of disruption and chaos.Sausalito's budget woes expose the internal turmoil and cybersecurity challenges facing local governments.Sausalito Today

Sausalito city officials revealed behind-the-scenes turmoil that contributed to $1.4 million in budget overruns during the 2024-2025 fiscal year, including the dismissal of the finance director amid allegations of misconduct and a major cyberattack that disabled city computers. While the council rejected calls for a forensic audit, they pledged to tighten budget approval processes and increase transparency around city spending.

Why it matters

The budget overruns and internal issues in Sausalito highlight the challenges cities can face in managing their finances, especially when dealing with unexpected events like cybersecurity breaches. The debate over whether to order a forensic audit also reflects broader tensions around government transparency and accountability.

The details

City Manager Chris Zapata detailed a series of chaotic events that unfolded in early 2025, including the dismissal of Finance Director Chad Hess over allegations of misconduct and a major cyberattack that disabled city computers. Zapata took responsibility for the budget overruns, which included $307,000 in community development costs and $400,000 in the city's $17 million capital improvement program. While an independent audit found no evidence of financial fraud, some council members called for a forensic audit, which the majority rejected as unwarranted.

  • In February 2025, Sausalito police were notified that Finance Director Chad Hess was 'involved in a dispute over gift card payments and aggressive inappropriate communication'.
  • In March 2025, Hess was dismissed from his position.
  • Two weeks before Hess left, City Hall was targeted by a cyberattack involving 190,000 log-in failures that disabled computers.

The players

Chris Zapata

Sausalito's city manager, who is leaving the post in May and took responsibility for the budget overruns.

Chad Hess

Sausalito's former finance director, who was dismissed in March 2025 amid allegations of misconduct.

Jill Hoffman

A Sausalito councilmember who demanded a forensic audit, which the majority of the council rejected.

Steven Woodside

Sausalito's mayor, who said a forensic audit was unwarranted given multiple internal investigations and audits.

Angeline Loeffler

Sausalito's recently hired finance director, who itemized and described the budget overruns.

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What they’re saying

“'These expenses weren't timely submitted. The question is how does that happen? Who's responsible for that? The answer is I'm responsible for that. I can tell you how it happened.'”

— Chris Zapata, City Manager

“'I do not believe there is evidence or reasonable suspicion of fraud and therefore there's no reason for a forensic audit. It's unwarranted under the circumstances.'”

— Steven Woodside, Mayor

“'Well, one of the issues that has come up repeatedly is whether or not there's evidence of some sort of misconduct by our former finance director and the circumstances of his departure.'”

— Jill Hoffman, Councilmember

“'This conspiracy theory stuff is tearing the country apart and it's here in our community. The nuggets of facts are exploited to sow fear, uncertainty and doubt instead of clarity.'”

— Ian Sobieski, Councilmember

“'We are now moving on to talk about our budget next year and how we can do a better job. That's what you're supposed to do.'”

— Melissa Blaustein, Vice Mayor

What’s next

The city is setting up new technology to allow the public to track spending, and is instituting additional departmental reporting deadlines to tighten the budget approval process and prevent future overruns.

The takeaway

The budget issues in Sausalito highlight the importance of strong financial controls, transparency, and accountability in local government, especially when dealing with unexpected events like cybersecurity breaches. While the council rejected calls for a forensic audit, the city is taking steps to improve its budgeting practices and restore public trust.