BLINDSIDED / ORANGE COUNTY’S FINANCIAL CRISIS : What Now? : Experts on finance and government provide prescriptions for change and lessons for the future. : Services

The Issues: Southern California’s recession and anti-government sentiment have pressured local municipalities to cut costs and get more bang for the buck in providing police, parks, roads and other services. With the Orange County debacle tightening the vise even further, painful cutbacks will have to be made.

Meanwhile, Orange County--as well as other local governments--might need to capture the efficiency of the most competitive industries in the private sector--by turning over some jobs performed by municipal employees to outside firms.

But what tasks can be turned over to the private sector, which services can be eliminated, and how should officials go about it?

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Roger W. Johnson

Administrator of the federal General Services Administration and former chief executive of Western Digital Corp. in Irvine:

“I’d consider bringing in a county chief executive officer and top professional management. You’d still have an elected Board of Supervisors, but you would run the operations of the county on a business basis. I’d also probably convene a citizen advisory board, made up of top people who grew that county into the great place it is, including academics, people from industry--people who have a vested interest in the county’s well-being.”

Further, Johnson recommends investigating whether to privatize--that is, turn over to private business--such jobs as collecting garbage and running prisons. “I have long wondered why we even have a county board of education. I don’t know why those duties can’t be divided among the local school districts, and give them back control and money, while eliminating what appears to be a duplicate layer of overhead.”

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Mark P. Petracca

Political scientist at UC Irvine and editor of The Politics of Interest:

“Eventually, if the crisis lasts long enough and if the funds that these entities have in the Orange County fund are tied up long enough, everybody’s going to be in the situation of having to generate additional revenue by either lobbying to do something about Proposition 13, or by moving to user fees, or by beginning to drastically and selectively cut back on services.

“Projects will be stopped. Some of the projects under way in this county that are good to have but not essential, probably ought to be scrapped. I’m thinking in the city of Irvine, for instance, of how we’re building underpasses beneath railroad tracks. It’s a nice thing to do if you have the money to do it, but if you don’t have the money, you probably can’t afford to do it. . . . When you talk about the school system, you want to start cutting back on building new schools or renovating schools rather than cutting back on the number of teachers.”

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Christine W. Letts

Lecturer at the John F. Kennedy School of Government at Harvard University and former transportation commissioner and secretary of the family and social services administration for Indiana:

Officials need to discard old notions about what is fair and start looking into what governmental tasks can be eliminated, Letts says.

Eliminating libraries and parks may hurt poor people more than the rich, “but they’re not endangering people. . . . When a municipality is really strapped, the most important thing is to have essential, safety-related services” such as police and fire.

In other cases, Letts says, governmental agencies should be streamlined through swift layoffs engineered by key managers. Then, in exploring ways to perform continuing tasks more efficiently, managers ought to meet with workers and urge them to figure out how they can accomplish the same jobs with fewer people. “They’ll quickly tell you what was stupid, or redundant or a waste of time before. They’ll get pretty creative when you tell them that they are responsible for the old work, but now there are only half of them doing it.”

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Jeffrey I. Chapman

Public finance economist at USC and co-editor of the annual publication California Policy Choices:

Repealing tax-limiting Proposition 13 would help local governments raise needed funds, but that’s politically impossible, Chapman says. Given that, officials should “do the second-best thing and give the government some flexibility in how to spend its money.”

“In an ideal world, what Orange County--or any county--ought to do is try to figure out how to get rid of so many of these special funds and mandates and earmarked revenues, and try to figure out the best way of spending the money.”

Since the late 1970s, local officials have become “far more constrained in how we spend the money, so we may have very expensive fixed rail, and nowhere near good enough schools, or nowhere near good enough garbage collection. So, the obvious solution is to figure out how to get rid of so much of the earmarking, and let the elected decision-makers make some decisions.”

Chapman believes there is room to contract out work to private businesses. But he opposes consolidation of government agencies, arguing that it generally increases costs because some workers’ salaries rise while relatively few employees are laid off.

Also, municipal planners and financial officials “need to talk to one another. Too many jurisdictions do all their planning and zoning and revise their general plan without even thinking about the fiscal implications. And the finance people impose charges and fees without worrying about the planning implications.”

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Peter V. Ueberroth

Orange County businessman and former commissioner of major league baseball, czar of the 1984 Summer Olympics and first head of Rebuild L.A.:

Although Ueberroth says each of the affected communities will have to come up with individual solutions, in general they must “postpone some capital improvements and increase productivity no different than any business through a recession.” Among other things, he says, hiring freezes are likely to be imposed.

“Fortunately, Orange County is very well-positioned for future growth. So, it’s like being in a cycle. They have to substantially slow down the spending cycle until they can catch up financially.”