Amid Weak Leadership, It’s Up to Orange County Voters : The future is at stake in next week’s balloting on bankruptcy recovery

Less than a decade into its second century, Orange County faces the decision of its life. The county can “close the loop” in its fiscal recovery plan and be out of bankruptcy in reasonably short order--or it can choose uncertainty and risk deadbeat status, dragging other California localities down with it.

The fate of the county is literally in the hands of its citizens, who will vote next Tuesday on Measure R, a proposed temporary half-cent sales tax increase that would raise the rate to 8.25%. The outcome could have far-reaching consequences as nervous financial markets watch for evidence of California’s commitment to make good on its obligations and as Los Angeles County faces its own budgetary crisis. Everybody has a stake.

SEEKING RESOLUTION: This crisis summons Orange County residents to recognize their own best interest in separating their anger from the reality of what recovery requires.

In fact, in response to last year’s $1.69-billion loss in the county’s investment pool, much already has been done to streamline local government, and still more is planned. Many of the officials who were responsible for the bankruptcy are gone. Two supervisors left office at the end of last year, one who remains has said he will not seek reelection and another faces reelection soon.

TAKING CHARGE: However, unfortunately the overall political leadership in the recovery has been weak and ineffective. Due at least in part to political cowardice, most county officials have not been willing to be candid with residents about the basic facts of municipal bankruptcies. It is generally recognized that establishing a clearly defined revenue stream is fundamental to credibility and to recovery.

Residents must look beyond their listless leaders, take matters in hand and build from there. Once this bankruptcy is resolved, Orange County will have to get serious about reforming government, perhaps streamlining or even eliminating the Board of Supervisors. The crisis has focused attention on the disconnection between the dynamic global economy of the region and the antiquated political mentality of county government. Those problems can be dealt with, but only after the fiscal gap is closed. Voters must have the patience to address one thing at a time.

BATTLE FOR THE FUTURE: Taxpayers need to fix the problem instead of deferring it. Economic growth in Orange County after several years of recession has looked promising. Why not take care of business now, and justify investor confidence in the finances of all of California in the process?

This is not about deciding which of several ways is best to restore Orange County’s fiscal health. There simply is no reasonable alternative to Measure R. Many of the people who don’t want Measure R are actually using the county’s vulnerability to press for the dismantling of government.

If the measure fails, no longer will the vaunted plan for full repayment to creditors be viable. The guilty plea of former Treasurer-Tax Collector Robert L. Citron on felony charges arguably gives creditors a powerful case in civil litigation if they do not receive full restitution. It is hard to imagine the courts looking favorably on Orange County if it renounces the one reliable way of paying its bills. If Measure R is rejected there will be higher borrowing costs, problems with skeptical financial markets, losses in property values and consumer confidence, and more pain.

In the first of these editorials on the Orange County bankruptcy, we cited New York City’s fiscal crisis in the 1970s and the lessons it offered for restoring “full faith and credit.” That city’s former controller, Harrison Goldin, suggested to business leaders in Orange County earlier in the bankruptcy that overcoming new creditors’ skepticism must involve not only officials but ordinary citizens as well. He said, “The notion that significant amounts of credit are available in an atmosphere in which people have not been paid back, and there is no credible plan for repaying them, takes on an aura of illusion.”

Orange County voters should burst the ideologues’ bubble. For its own good, for the good of the state and region, the county must take the needed medicine and get on with life after bankruptcy.