Right, Everyone Gets the Anti-Tax Message : But what to do in wake of landslide defeat of Measure R?

Tuesday’s defeat of the sales tax measure for bankruptcy recovery in Orange County sent a resounding message of dissatisfaction. Unfortunately, it was not a day for solutions. The county’s dire situation now is complicated further and certain to be of heightened concern beyond its borders, especially in fiscally strapped Los Angeles County.

The responsibility lies squarely with anti-tax forces to get beyond fantasy and rhetoric to construct a realistic plan of recovery. Rejection of a reliable revenue stream probably has sentenced Orange County to episodic crises like the one that occurred Tuesday when the county couldn’t find buyers for bonds. In the face of inevitable turmoil, the county cannot walk away from its commitments to creditors. It must redouble efforts to find the money to meet its obligations.

Those who probed the county’s assets in seeking alternatives to a tax already know that there are no easy answers. Some in the county now are talking about refusing to repay schools, cities and others 100% of the money they lost in the county’s failed investment pool. That idea is foolish and reflects the disingenuousness of elected officials who passed resolutions calling for full repayment even as they opposed Measure R.

It is critical that Orange County reject any plan that repudiates legitimate debts to schools, cities and others who lost money. To renege would only reinforce the fast-spreading view that Orange County makes promises it never intends to keep. Nor should the county raid transportation sales tax funds; that would break faith with voters. If residents want to envision what bankruptcy might mean, they should think about the worsening traffic, deferred road improvements and scarcity of public transit options that would result from depleted transportation funds. And don’t put too much hope in the county’s fraud suit against the Merrill Lynch brokerage, either.

Those who say they see no effects of bankruptcy may not have to wait much longer. After the vote, Standard & Poor’s quickly changed Orange County’s status to one of default and issued stinging criticism of the county. Moody’s deplored what it called an utter failure of responsibility by the county, and it termed county actions during the bankruptcy “outrageous and unprecedented.” On the day of the vote, Orange County was greeted with scorn by investors when it sought to borrow $155 million, even at very favorable interest rates. County Chief Executive Officer William J. Popejoy remarked that approaching the icy investors was “like you’re talking to an echo.” His expressed pessimism about even trying the municipal bond market signaled the deep hole Orange County is now in.

Sacramento has acted constructively by passing enabling legislation to help the county help itself, rather than taking control of county operations. As the crisis continues, the state must continue to monitor the situation, but it cannot be expected to have infinite patience.

Within Orange County, the public must take it upon itself to look out for the quality of schools and cities. The threat now being made by anti-tax forces to hold elected officials up to undeserved public shame for asserting their rights to full repayment under the pool settlement is reprehensible and should be repudiated. While the vote represented a fury with the local political leadership, to some extent understandable, residents surely want Orange County to remain the special place it has been to live and work.