Time to Celebrate, Then Get Back to It : Passage of Bankruptcy Recovery Plan Only a Beginning

Orange County finally got its bankruptcy recovery package at the end of a stormy legislative session in Sacramento, but in many ways the period that lies ahead is as much a beginning as an ending.

Naturally, after months of bad news, there was some celebration last weekend when a package of bills was approved that would chart a course of recovery with transit funds and other revenue.

Getting agreement on a plan was difficult and welcome. It is far better to have a plan than none at all, to be sure. By comparison to the confusion and pain now facing Los Angeles County, the local fiscal situation in some ways appeared to be downright stabilized.

The Orange County recovery plan finally was put in place at a time when politicians all across the country are responding to strong grass-roots aversion to new taxation. It might be tempting for some to point to this experience as a case study in recovery without new taxes. There are many lessons to be drawn, but when you read the fine print, the lesson is much more likely to be something different. It is that there is no such thing as a painless way out of a municipal financial crisis.

The county’s conservative political banner was raised high in recent months, and the ideological aversion to new taxes found expression in the overwhelming rejection in June of a sales tax ballot measure. Nobody likes new taxes, and those who were courageous enough to call for them came in for a special dose of scorn. At the time, there were political players saying such things as that it would be impossible for any politician who supported the tax measure to get elected in the future.

In fact, those who argued against the clear payment of debt through a sales tax hardly are entitled to crow now about the triumph of political philosophy. Indeed, it would be good for the county to have the various partisans in the recovery effort begin to leave their differences behind and move forward, mindful that people of good will may have differed on routes to recovery.

As it is, the plan still will affect virtually everyone, at the same time that it leaves a good deal of uncertainty. There are likely to be new user fees and reduced services ahead. The county suddenly will be more vulnerable to flooding and environmental damage. It is likely to pay more for its loans. The effect on transportation services remains to be seen. Much of the plan hinges on the expectation that penciled-in revenue actually will be there.

What Orange County really has done is elect to pay through hidden costs and an uncertain bottom line rather than up front. While some costs likely will be passed to outsiders, the plan does not succeed as much at spreading the price of recovery as asking tourists and visiting shoppers to pay a sales tax would have. All in all, the county is paying a price to be able to say that it is going without a new tax.

There was of course a justifiable measure of relief. As the Legislature was winding down its frantic business last weekend, Supervisor Marian Bergeson, for one, said people in Orange County were readying to celebrate the closing of a deal. This was so even as new clouds gathered over the financial picture in neighboring Los Angeles. Bergeson is one of the people who worked tirelessly to navigate a workable plan through the maze of Orange County and Sacramento politics, and obviously she and others are entitled to a moment of satisfaction.

If the county is able to get out of bankruptcy next year, it would be a significant accomplishment. But resolution of this financial crisis still awaits a measure of good fortune.