O.C. Tax Hike Now Supported by Think Tank
One by one, they have bowed to the hated T-word.
First the bankers owed billions by bankrupt Orange County hinted that taxes would be an inevitable step toward recovery. Then conservative business leaders said new and increased fees must be considered. Later a handful of state politicians from both sides of the aisle joined the chorus, saying taxes cannot be ruled out.
And Tuesday even the libertarian think tank that previously insisted Orange County could slash, sell and privatize its way out of financial disaster switched its stance, calling for a short-term tax hike as a crucial part of a complex solution.
“You don’t want to stand on principle to the point where you cut your own throat,” sighed Bryan Snyder, senior vice president of the Los Angeles-based Reason Foundation, a group whose report last month provided intellectual backbone to the anti-tax cry.
“We haven’t changed our minds about all the bad effects of a tax increase,” Snyder said, “(but) that may be the only tool you’ve got.”
The unlikely admission from the foundation leaves the county’s elected supervisors as lonely voices repeating the mantra: no new taxes.
“My position is that I am not an advocate of a tax increase, period,” Supervisor Roger R. Stanton said Tuesday. “Most of my constituents would like to have all other avenues pursued first.”
Supervisor William G. Steiner said it is “premature to look at that tool,” saying taxes should only be examined after “we’ve exhausted all other remedies.”
“We haven’t even made our cuts yet. . . . Let’s go through this exercise first,” Steiner said. “I think we have to convince people that there are no other options. We are not there yet.”
Snyder, who revealed Reason’s change of heart Tuesday afternoon on the public radio news program “Which Way, L.A.?,” said the county’s schedule of bond payments and other obligations over the next few months make an immediate revenue stream essential.
While the foundation remains confident that government “right-sizing” and asset sales could eventually plug the county’s $2-billion hole, those methods cannot raise cash quickly enough, Snyder said.
Last week, county Chief Executive Officer William J. Popejoy proposed layoffs of 1,040 county workers, announced a list of county properties to be put up for sale and offered another list of county services that can be turned over to the private sector.
But those initiatives will not save or raise enough money to meet $1 billion in bond debt coming due this summer, or to fully repay the nearly 200 cities, schools and special districts that placed money in the county pool, Snyder said.
Supervisor Marian Bergeson agreed with Snyder that budget cuts alone won’t dig the county out of the financial mess, but said she still believes the county might be able to find another revenue source besides taxes.
“I say we should do everything we can to avoid taxes,” she said. “We are an economy emerging from a deep recession. There has to be a strong awareness of the impact of additional taxes on the economy.”
Interim County Treasurer Thomas E. Daxon, another outspoken opponent of tax hikes, said Tuesday that he remains unconvinced.
“I do not feel that I can sit here and guarantee that we can solve the problem without a tax increase, but I do know the numbers. I do know the obstacles. I think there is a good chance that it is doable,” Daxon said. “I certainly would not be ready to throw in the towel. . . . I’m not prepared to encourage . . . a tax increase.”
In its report issued last month, Reason suggested that the county lay off 1,815 workers and slash the remaining employees’ pay and benefits by 10%. The foundation also urged the county to sell jails, landfills, John Wayne Airport and the airport facility at the El Toro Marine Corps Air Station, which is scheduled to close by 1999, and to privatize fire and paramedic services, jail operations, animal control and vehicle maintenance.
Snyder said Tuesday that Reason continues to support all those ideas as beneficial both to the county’s financial rescue and ongoing efficiency. However, he said the report’s authors now believe that implementing their suggestions would take too long for a county desperate for cash.
“Given that you can’t do anything else within the time that you have, (taxes) may be what you have to do,” he said.
County officials estimate that a half-cent increase in the 7.75% sales tax would bring in about $135 million annually, which could be used to back about $1 billion in new bonds. Such a tax must be approved by four of the five supervisors and a majority of the voters.
The county could also raise about $100 million a year through a “tippler’s tax” upping the price of alcoholic drinks by 20 cents each, and about $50 million by hiking existing alcohol and tobacco taxes.
Snyder said any increase in sales or property taxes should have a clear expiration date and be pledged directly to the recovery.
“The only way that we would ever go along with that is if it were for a very specified period of time . . . and we make it clear that the reason is we need to have the revenue stream until we get these other things in place,” he noted. “If it were made very clear that these other things (cuts and privatization) would in fact happen, we could say all right” to a tax increase.
Times correspondent Shelby Grad contributed to this report.
* CREDITORS HATCH PLAN: County would borrow against property tax growth. A31
* REPORT FINDS FAULT: Treasurer’s office lacked oversight, written policies. A33
