Ideologues Turn a Blind Eye to Orange County’s Realities : Only a confirmed, consistent revenue stream can fill the huge fiscal gap

With the credibility of municipal financing in California on the line, too much of Orange County’s response to its bankruptcy crisis has been a mixture of ideology and outright denial. There is even the idea that the county is getting what it deserves. What nonsense.

For those serious about recovery, there is no credible “Plan B.” Without a sales tax, the county still would be $750 million to $800 million short of filling the $1.7-billion hole caused by the collapse of the county’s investment pool. That takes into account $188 million in budget cuts, projected sale of assets, refinancing short-term debt and allowing neighboring counties to dump in local landfills for a fee. There also is the overriding question of how much government would be left to cut after layoffs and social service cuts. Los Angeles County, for different reasons, is now facing that same pressing question.

LOOPY LOGIC: There are ideologues in the thick of the fight over Measure R, the proposed half-cent sales tax on the Orange County ballot June 27, who don’t care whether the county government gets back on its feet. They are pitching a plan to extract water from stones, ignoring that Orange County will pay either through a tax, higher borrowing costs or a deteriorating quality of life.

Their audience understandably is very angry about the mess their political leaders got them into. But opponents of taking the medicine do not really have viable alternatives. Many want to “send a message” by voting no. In a county that prides itself on conservatism, they agree with taking personal responsibility for obligations in all things but bankruptcy.

This is not what the people of Orange County, or California for that matter, should want. Let’s look at some of those “alternatives.”

PRIVATIZATION: Privatization is best used as a long-term strategy in combination with other measures. Many voters may not realize that even before the bankruptcy, Orange County had privatized $950 million in services. Orange County government, in fact, was found to be quite efficient by the recovery team.

There now are additional plans to privatize many county services and sell up to $145 million in assets including libraries, courthouses, a drug rehabilitation home and a juvenile center. There also is talk of using transportation funds for the recovery. But there are problems.

THE AIRPORT: For example, the sale of John Wayne Airport is a favorite of advocates of selling off assets. But before ringing the cash register, consider the turnoffs for a private purchaser. The Federal Aviation Administration suggests there is a good reason why no public airport ever has been sold in the United States. For one thing, revenues must stay on site, and the federal government has a host of requirements that must be met by operators. Anyone interested in the airport is going to want assurances, which cannot now be given, that El Toro Marine Corps Air Station won’t be a competing airport someday. And the county still has to repay $252 million in loans for construction of a new terminal and parking structure at John Wayne.

MEASURE M: Several legal opinions say transferring funds for recovery from the county transportation sales tax passed in 1990 would be illegal. There is the suggestion of repeal, but this would cause delay, and creditors even now are restive. And what about keeping faith with voters willing to pay taxes to alleviate some of California’s worst traffic?

FINANCIAL RESTRUCTURING: The county wants to roll over existing financial obligations, but even if that’s possible, the county must still find a way to pay for those obligations. Another plan, to ask cities and special districts to use growth in property tax rates to issue bonds and divert some of current sales and property tax revenue, is a bit like using one credit card to pay off another.

REALITY CHECK: The idea that bankruptcy wouldn’t be so bad is fiction. The implications of turning down a way to pay its bills would be serious for Orange County and other localities in California, like fiscally troubled Los Angeles County. Without Measure R, Orange County will have less bus service, more potholes, fewer police officers and lifeguards, higher pupil-to-teacher ratios and additional debt service for new schools. Is this to be Orange County’s future?

Wednesday: Voters must take charge.