Commentary : Perspectives On The...

CAROL O’CLEIREACAIN

In New York City, we raised taxes to deal with fiscal problems in the 1970s and ‘90s: Property taxes were hiked, then frozen. We also had a temporary surcharge on income taxes.

Orange County is not the first public entity to have serious financial problems. Its case is different because it has taken the radical twist of declaring bankruptcy. It would behoove officials to talk to everyone to see every alternative: cutting staff, raising taxes, doing give-backs.

I see they’ve hired (former American Savings and Loan Chairman) William J. Popejoy as interim chief executive. He’s been quoted as not ruling taxes off the table. People might trust (the call for taxes) coming from someone from the business sector more than from a politician.

Carol O’Cleireacain is an economic consultant and former New York City budget director.

Don’t Tax, Restructure

MICHAEL J. BOSKIN

I believe it should not (raise taxes). It should restructure its finances, control and reducespending and spread out some capital projects. It should consider greater privatization and outsourcing the delivery of some public services to reduce the cost of delivering those services to Orange County residents. I think an aggressive program along these lines would work because Orange County has a bright long-term future despite its current problems.

Michael J. Boskin is an economics professor at Stanford University, a senior fellow at the Hoover Institution and a member of Gov. Wilson’s economic advisory group. He served on President Bush’s Council of Economic Advisers.

No, Trim Bureaucracy

TONY LAM

I don’t believe taxes should be raised. There are a lot of cost-effective measures and belt-tightening that can be done. A lot of county services are redundant. They have layer upon layer of bureaucracy. In the past, all the property taxes of the city have been funneled to the county and each supervisor has built his own private empire. For example, whenever they have funds to give out, they find a nonprofit organization and they give it a check for $10,000 from a supervisor’s own private slush fund. Why can’t the city decide what is good for its community?

This plus the bankruptcy and the three-year recession have hurt the cities and the business community. The cities are the ones that need the money for the infrastructure. An overall restructuring must be done in such a way that the cities and the county work together without fighting and quibbling. Yet, in my two years as a councilman, I have never had good communication with them. There have been few links between our city and the county.

Tony Lam is a city councilman in Westminster.

Sales Tax Is the Fairest

ELIZABETH THOMAS

Schools were already underfunded before the crisis. If we don’t get some assurances from the county that we can get our money back or if there’s not some form of taxation or loan guarantees or something, the cutbacks will be a total disservice to the children currently in our public schools and could affect them for three to five years or longer.

The Irvine Unified School District polled parents and fewer than half wanted a parcel tax. Countywide, they can try to raise property taxes but that doesn’t affect everybody. A sales tax is the fairest thing.

Maybe what they need to do is fashion an increase, say for three years, with provisions on the other end for cutbacks and rearranging how they do business--privatizing and sharing services. Then this won’t happen again and we can make government more efficient overall.

Elizabeth Thomas is executive director of the Irvine Education Foundation.

Many Tax Sources Available

LENNY GOLDBERG

Orange County should seek authority for a countywide admissions tax on things like Disneyland, Knott’s Berry Farm and Anaheim Stadium. There are a lot of outsiders coming to the county.

The special session of the Legislature could, by statute, enact a county surcharge on income tax. Using 1991 tax-year figures, of the $1.5 billion paid, about $1 billion came from the top 15% of filers. A 5% surcharge would get between $75 million and $100 million. You could do this on a time-limited basis.

Counties don’t have a lot of ways to raise money. Cities can look at hotel or utility taxes or garbage fees. School districts can consider parcel taxes. It takes a two-thirds vote for a school district to do a parcel tax. I live in a town that has done three parcel taxes for its schools. It’s a great investment for the schools and increases property values greatly for the amount you invest.

Lenny Goldberg is executive director of the California Tax Reform Assn. in Sacramento.

Bad Economics, Bad Politics

HUGH HEWITT

Taxes are bad economics, bad public policy and bad politics.

Most economists familiar with the Orange County economy have emphatically denounced the idea as rendering our local business climate non-competitive with that of surrounding California regions and neighboring states. We must maintain at least a level playing field to maintain critical jobs.

It’s bad public policy because it’s obvious that a sales-tax increase would be simply sacrificing private-sector jobs to save public-sector jobs.

And it’s bad politics because anyone who proposes it or endorses it will be recalled or their future will be over.

The school districts, at least, need back 100 cents on the dollar. It’s difficult, but the county has hundreds of millions worth of assets, which they simply must sell within the next 60 and 120 days. Of course, they’ll have to radically downsize county government. It’s distasteful because a lot of hard-working public-sector employees will lose their jobs and a lot of assets people would not normally want to sell will have to be sold. But it is doable.

Hugh Hewitt is a Newport Beach attorney and a co-host of KCET’s “Life and Times . “

Consider All Options

KATHLEEN BROWN

When financial calamity struck New York City, Philadelphia and Bridgeport, Conn., each swallowed hard on a package of solutions--many of them politically unpalatable to various constituencies and special interests, but which allowed the communities to find a way back to solvency. So must Orange County.

In flatly ruling out even temporary new revenue sources and offering to pay local agencies only 77 cents on their investment dollar, the Orange County Board of Supervisors is negligently failing to recognize that municipal obligations represent moral obligations. Unlike their corporate cousins, public entities are ongoing concerns that must stand the test of time in the credit markets.

Quick-fix political solutions won’t restore Orange County’s credit trustworthiness. Moreover, taxpayers will ultimately pay a far greater price if the county continues to ignore the cold, hard realities of the financial marketplace. It’s time for Orange County’s political leaders to wake up to those realities, and that means considering all responsible solutions, from budget cuts to privatization to the dreaded T-word.

Kathleen Brown is the former state treasurer.

Yes, to Maintain Quality

JOHN PALACIO

I think that taxes should be an option in order to maintain the current quality of service as well as the obligation to reimburse 100% to those government entities, such as schools, that put trust in their funds. It’s quite clear that the cuts being proposed will have a significant impact on the poor and minority population of this county.

For example, in the past year there have been significant cutbacks on library services, yet the county managed to build a new library in (upscale) Rancho Santa Margarita.

We’re also concerned about the impact on minority employees in the county, because whatever affirmative-action goals the county has achieved has been over the past several years. Many of the recently hired employees are minorities. They are the last hired and first fired.

John Palacio is the Orange County representative of the Mexican American Legal Defense and Educational Fund.

Privatize First

BENJAMIN ZYCHER

A tax increase ought to be the last resort.

There are huge efficiencies to be had reorganizing the Orange County government. The airport should be sold. Fire services, trash services, transit services, the libraries and 911 ought to be privatized. Though they couldn’t do this on their own, they could look into doing without a county office of education that probably costs more than it is worth.

I also think it’s a very bad idea for governments to have investment portfolios with the income to be used for offsetting taxes. That hides the cost of government from taxpayers.

Benjamin Zycher is vice president of research of the Milken Institute for Job and Capital Formation, Santa Monica.

The Best Way to Raise Funds

ROBERT POLLIN

My answer would have to be yes. In large measure, the crisis itself was the result of constraints on taxation. In my view (former treasurer Robert L.) Citron and his advisers were pushed toward a position of embracing a highly speculative portfolio to a significant degree because of a decline in tax revenues, so much so, that by last year, revenues from investment proceeds exceeded revenues from property taxes.

Orange County remains a wealthy county, and in order to maintain a reasonable level of services, we now see that taxation is a superior way to raise revenues. Citron was a hero up until last year. Why? Because he raised a lot of revenues in a way that allowed the county avoid raising taxes. What now becomes clear is that speculative financial practices are not an acceptable substitute for a tax base.

Robert Pollin is a professor of economics at UC Riverside and a research associate at the Economics Policy Institute in Washington.

It’s a Matter of Will

HEATHER L. RUTH

When New York City nearly defaulted, it was a wake-up call to officials that they had let taxes get too high. It was a large center city with a large poor population in competition for jobs with the suburbs. If they raised taxes, it would exacerbate the problem, chasing people away.

But in Orange County, the situation is very different. It’s one of the richest counties in the nation and doesn’t have a significant low-income population. Most people are not going to leave. It’s not a question of capacity, but willingness, to raise taxes.

Heather L. Ruth is president of Public Securities Assn., a New York-based trade group for bond underwriters, and former executive director of the Municipal Assistance Corp. for the City of New York, which sold bonds on the city’s behalf following its financial crisis.