A Year Later, Orange County Hangs On : Bankruptcy: Its government didn’t sink and hardship sparked reforms. But critics say they aren’t enough.

Buses run, streets get paved, schools are open and crooks still go to jail. Some of its bond holders had to extend nearly a billion dollars of county debt, but county government hasn’t shut down, and taxes didn’t get raised.

One year after the nation’s worst municipal bankruptcy, the doomsayers’ most dire predictions for Orange County have not come to pass. It has taken a heavy hit, no doubt, but the country’s fifth-largest county hasn’t sunk.

“Chicken Little was wrong. The sky didn’t fall this time,” said Sherry Bebitch Jeffe, a professor of government at Claremont Graduate School who has been following the bankruptcy fallout.

Most residents haven’t even been pinched by the county’s loss of nearly $1.7 billion, first disclosed a year ago. Unemployment is down, economic activity is up and life pretty much continues at the same pace it had before last December’s bankruptcy declaration.

But there has been pain, both great and small, throughout the county over the past year.

Because of the financial calamity, fees at the county’s parks, beaches and zoo have been raised. Trash collection costs for most residents have increased. Schools have had to cut back on classroom supplies, student field trips and teacher conferences.

Drug and crime prevention programs have been cut. Prenatal care services for the poor have been wiped out. And some misdemeanor offenses that previously warranted jail time now draw only simple fines.

For those who work with and within the Hall of Administration--the heart of county government--the winds of turmoil have blown steadily over the last 12 months. Jobs have been lost, careers have been shattered and services, especially to the county’s poorest and sickest, have been slashed. The Hall has become a sad and gloomy place.

It has been a year most would like to forget.

“This has been the hardest 12 months in my life, and that’s an understatement,” said Supervisor William G. Steiner, who announced two weeks ago that his first full term in office would also be his last.

As the county marks the first anniversary of the bankruptcy, much uncertainty remains.

Will the bankruptcy court approve the county’s recovery plan? Will the governor be obliged to appoint a state trustee to carry out that plan? Will the grand jury and federal authorities charge the Board of Supervisors and other county officials with misconduct? How long will the county and cities have to postpone capital projects such as new streets, jails and courthouses for lack of funds? And what price will the county have to pay in the future when it approaches Wall Street, hat in hand, for loans?

Also unclear is whether the bankruptcy will have any lasting effect on the way county government operates.

“A lot of things are still up in the air,” Steiner said.

Shortly after the county’s fiscal collapse, some residents, looking for a bright side, said the bankruptcy provided a perfect opportunity to overhaul and reshape an outdated and inefficient government. Orange County, they said, would become the nation’s laboratory for reinventing government, a model for others to follow.

Hopes were high as county officials talked boldly of selling off assets, privatizing services and deflating a bloated bureaucracy.

But as the county enters a second year in bankruptcy, most people fear that the opportunity has been squandered. John Wayne Airport and the county’s landfills--the most attractive assets--remain unsold, services and jails have not been privatized and plans for a restructured county government have advanced little, if at all.

“We haven’t done enough with the opportunity that was given to us,” said Robert Poole, president of the Reason Foundation, a libertarian think tank. “We’re not even close to what we should be doing. I’m pretty disappointed that we’ve seen so very little change in the scope and function of government in this period of time.”

William J. Popejoy, the retired business executive who served for almost six months as the county’s first chief executive officer, was even more pessimistic.

“I don’t think the lesson has been learned,” said Popejoy, who resigned Aug. 1, complaining that the supervisors had re-involved themselves in the day-to-day administration of county government--the same everyone’s-in-charge management system that failed to head off the bankruptcy in the first place.

“It seems like the county is going back to business as usual,” Popejoy said then. “I’m saddened to see that. County government right now is dysfunctional at best, and at worst, dangerous.”

Even members of a highly touted, county-formed committee grappling with issues of government restructuring concede that not many substantial changes have occurred during the first year of the bankruptcy.

“Dramatic, huge change isn’t going to happen overnight and it can’t,” said retired Superior Court Judge Bruce Sumner, who headed the supervisors’ charter commission. “All change has to be incremental unless we have a revolution.”

In March, county voters will have a chance to restructure government when they go to the polls to decide a ballot measure that would change Orange County from a general law county, which is governed by statutes approved by the Legislature, to a charter county, which is governed by statutes dictated by county voters.

A charter form of government, supporters say, would give the Board of Supervisors the authority to privatize jails and other county services and appoint professionals to offices such as treasurer and clerk-recorder instead of keeping them elected positions.

The voters will also have the opportunity to decide on term limits for supervisors and on whether to expand the board from five members to nine.

“These changes would have been unheard of before the bankruptcy,” Sumner said.

But to Tom Rogers, a county activist who is a member of the charter commission, the proposed changes in government are “pitiful,” so inadequate that he and others are pushing a rival ballot proposal. Their version includes such dramatic ideas as placing an eight-year term limit for county department heads and creating citizen oversight committees with subpoena power to monitor county bureaucracy.

“Not only has nothing changed, the status quo is stronger now than it ever has been,” Rogers said. He added that nothing has been done to improve competitive bidding on government contracts in the county, reduce the influence of lobbyists or consolidate some of the many special districts in the county that seem to deliver the same services.

While some say the charter commission’s effort falls short of reinventing government, others point to changes that have occurred.

The county’s work force of about 17,200 has been cut to 15,300. Nearly $190 million has been cut from the discretionary budget that is now $275 million--a level it had not seen in more than a decade. A chief administrator who lacked hiring and firing authority has been replaced by a chief executive officer who wields far more power. And for the first time, the board holds night meetings once a month.

Irvine City Manager Paul O. Brady Jr. said the bankruptcy has forged solidarity among the county’s officialdom, and he noted that many who once controlled the direction of county government are no longer in power.

Consider:

Board of Supervisors Chairman Gaddi H. Vasquez has resigned. Supervisors Roger R. Stanton and Steiner have declared they will not run for reelection. Former County Administrative Officer Ernie Schneider was fired. Former County Counsel Terry C. Andrus resigned under pressure.

And Former Treasurer-Tax Collector Robert L. Citron, whose risky investments lost nearly $1.7 billion and forced the county into bankruptcy, has pleaded guilty to six felony charges of fraud and misappropriation of public funds. His underling, former Assistant Treasurer Matthew Raabe, has been charged with the same offenses and has pleaded not guilty.

Meanwhile, local and federal investigations continue to probe the involvement of supervisors and other county officials in the bankruptcy.