Visionaries See 10% Chance of Avoiding State Takeover

They could be out there.

Some may be hiding. Some may wear disguises. Some are fudging. Some are speaking out, but in tiny, pipsqueak voices.

And then there are some, like Sandra Genis and Mark Goodman, who are saying it out loud and proud: Orange County cities should forfeit the final 10% proposed to them under the post-bankruptcy repayment plan.

What makes Genis and Goodman notable is that they’re city council members whose cities lost money. Both argue that the cities are better off cutting their losses now. More interestingly, though, they say Orange County cities have no legitimate claim to 100% repayment.

Are they daft? City council members arguing against money for their city? Yet, Genis and Goodman don’t seem either overtly loony or encumbered by a death wish.

Both say their arguments are weighted with pragmatism and ethics.

Genis of Costa Mesa stops just short of saying cities should be ashamed for demanding full repayment. Noting that the fund managed by ousted Treasurer-Tax Collector Robert Citron, however risky it turned out to be, returned higher yields than safer investment routes did, Genis asks, “Ethically, how could anyone who’s been in the pool represent to the public that they really lost? Because they didn’t. It’s not even honest to do that. They lost their winnings.”

Under the current repayment plan, cities won’t lose their principal if they forfeit the final 10%, Genis says. Walking away now would ease the financial burden and reduce the chances of a much worse plan coming down the pike later, she contends: “Sacramento is getting pretty disgusted with the local folks. They say that we are just saying ‘No,’ no matter what’s proposed. We don’t say, ‘This is our solution.’ If we don’t, it will be imposed from Sacramento. And that’s real easy [for local officials to do], because then you can say you weren’t responsible.”

Goodman, Laguna Niguel’s mayor-councilman, is equally adamant: “I said early on that the city should walk away from the debt. Cities took the position they wanted 100% back, but then said no new taxes. I said you can’t have it both ways. I said if they wanted 100% back, they should stand up on the podium with Bill Popejoy and the rest of the guys and say they wanted Measure R.”

Goodman argues, as does Genis, that forfeiting the 10% would be palatable for most cities. Laguna Niguel would lose more in potential diversion of future tax revenue than it will if it drops its claim under the repayment plan, he says.

Beyond that, he says, the city has no rightful claim to demand full repayment. “If we were a private investor, it would be end of story, we lost money. . . . Are we in this to save our own political lives? Yes, we made a mistake,” he says. “We can make all the arguments we want that Citron lied to us, but Harry Truman said, ‘The buck stops here.’ That’s my great consternation, that there’s such a lack of political leadership. Who in the hell in Orange County, other than Citron, who has pleaded to felonies, has said, ‘We made a mistake’ ?”

Genis thinks she and Goodman have a few dozen closet supporters among local councils. Goodman isn’t so sure. “I have to be truthful that it’s a voice in the wilderness,” he says. He complains that the local makeup of the League of California Cities is an “insider group, where all the policy decisions are driven by a small group of insiders and everybody toes the line. I’m a guy who doesn’t mind being on the outside and not being in the fold, because that’s not why I got into politics.”

Janet Huston, the league’s executive director, takes solace in believing that Genis and Goodman are a distinct minority among local council members. The league is still exploring possible plans, she says, adding that it would be impractical to rewrite the settlement plan now. She also says the long-term repayment schedule means that forgiving the final 10% wouldn’t immediately help the county out of bankruptcy.

She also disputes that cities are somehow honor-bound to surrender their claims, just because they chose to invest with Citron. “No one went into it with the notion that Citron was committing fraud,” she says.

Genis thinks a groundswell could develop among cities to forgive the final 10%, especially as plans from Sacramento unfold. Goodman is less optimistic, but says, “I have absolutely no doubt we’re on the right side, ethically and pragmatically.”

Goodman, a former aide to Supervisor Thomas F. Riley, says, “I have resigned myself to continue this fight. I haven’t resigned myself to shutting up, but neither have I taken out any bets in Las Vegas on my chances of winning.”

Dana Parsons’ column appears Wednesday, Friday and Sunday. Readers may reach Parsons by writing to him at The Times Orange County Edition, 1375 Sunflower Ave., Costa Mesa, Calif. 92626, or calling (714) 966-7821.