Popejoy Plan Deserves Unified Support : Grumbling Must Be Put Aside as Deadlines Loom to Overcome the Financial Crisis

The county’s scenario for recovery from the bankruptcy can be likened in some ways to a hastily stitched cardigan. With inventory low, it has been sewn in a hurry with a “winter” coming on that the tailor forecasts will be long and cold without the right clothing.

The plan has some threads hanging loose. The buttons to make it useful for keeping out the chill have yet to be all put in place. Some of the customers are yanking at the strings before the garment really holds together. They are not being shy about questioning the quality of the goods. This is a critical time, and there are times when it appears that deal can easily come unraveled.

Basically, what is really needed at this crucial moment is the one thing that is missing. That is unified support from Washington to Sacramento to the Hall of Administration to local neighborhoods for the only viable recovery plan that anybody has come up with--the combination of cuts, taxes and restructuring that Chief Executive Officer William J. Popejoy has suggested.

Last week, Popejoy said that there was no fallback plan if one of the key components, the sales tax initiative, wasn’t put in place. He told students at Cal State Fullerton, “ ‘Plan B’ is basically ongoing bankruptcy.”

The other options are a mixed bag, like the unpalatable invalidation of $600 million in bonds, and more sensible plans like extending debt with a reasonable expectation of additional interest for bondholders. There should be and are alternative plans being worked up for the worst-case scenario, but none is likely to do the job, and unless that happens, “Plan A” must have support.

The county budget has been slashed, assets for sale and privatization are being targeted, and jobs have been lost. There is grumbling about the perceived problems with the plan, but still the arrival of winter looms on the horizon. The county has to convert recovery warrants into cash by June 5, and has $1.28 billion more in bond debt due in a few months.

Meanwhile, the cash on hand has been divided up in the recent settlement plan for pool investors, but 17 maverick cities and redevelopment agencies are only at the beginning of possibly years of litigation. These agencies chose a plan providing them with about 77 cents on the dollar and allowing them to seek the remainder through the courts.

What the county needs very desperately now is the kind of united spirit that finally made it possible for New York City to work out a solution to its fiscal problems.