Togetherness a Must in the Bonds Fiasco : A statewide commitment to recovery will pave way to restored confidence in Orange County

In the week and a half since Orange County filed for bankruptcy, it has become abundantly clear that the state needs to take a more prominent role in restoring confidence among residents, investors and businesses.

When New York City faced fiscal disaster two decades ago, Albany sent in the cavalry, rounding up investment bankers, creditors and politicians to help. Banks and insurance companies bought municipal bonds to help bail the city out. There was a feeling that the various communities that made up New York were in it together; united they stood.

The same sort of cooperation is needed now for Orange County, even though its fundamental social and economic structure is stronger than was New York’s. Sacramento must reassure the bond market that it will keep a closer eye on Orange County when the day comes, as it will, for the county to try again to persuade investors to buy its bonds.

Granted, the state is facing its own budget problems. But a good argument can be made that Orange County got into this mess by allowing one man, resigned Treasurer-Tax Collector Robert L. Citron, to take great investment risks with public funds because for years he earned money that helped the county make up for budget cuts in Sacramento.

Gov. Pete Wilson has suggested financial advisers whom the county could hire and he has dispatched state auditors to help assess the damage. However, his acknowledgment that Sacramento has a role to play has been, at best, grudging. Why not, for example, form a commission of business people, academics and others with expertise in the area to look independently at the county and recommend methods of recovery? Orange County has plenty of expertise in those fields, and the experts’ commitment to the county’s future could help stem feelings of panic.

Wilson did acknowledge that state law requires the state to provide education for students if the school districts go bankrupt; that is a real concern, since the county’s 31 districts were required to put their money in the county fund and now face major problems. And he was correct to draw the line short of covering the losses of five districts that borrowed money to invest with Citron. An attorney for one school district, Irvine Unified, honestly conceded that the borrowed money will not be fully recouped.

The recovery will require local resolve as well as state help. The county, cities, schools and special districts are going to have to find ways of streamlining even more than they have been forced to by previous budgetary pressures. That will be difficult, but unsnarling this imbroglio will require the resolve and commitment of everyone from Sacramento to county and local government.