Morning in Orange County

Orange County’s imminent emergence from the largest municipal bankruptcy in U.S. history is remarkable for its quickness. It was only 18 months ago that the county filed under Chapter 9 of the U.S. Bankruptcy Code, after the staggering loss of $1.64 billion in its investment fund.

Now the county is ready to pay off those who bought its bonds, the companies that did work and have been waiting for payment since December 1994, and other creditors. The wherewithal for the belated payment of debts is this week’s sale of $880 million in new bonds.

Everything has its price, however, and for Orange County the bill for the bankruptcy will be coming due for decades.

To save money, nearly 600 county workers were fired. More than a thousand others took buyouts or quit. Numerous county agencies saw budgets slashed severely, in ways that will rebound on the streets, beaches and parks. The Probation Department, a front-line agency in the fight against crime and gangs, lost 11% of its budget. The Social Services Agency, whose mandate includes child welfare, cut its budget nearly 30%. It is more difficult for residents to get government benefits these days, more time-consuming. There are fewer people to answer questions, to help with paperwork.

The county’s own cost of borrowing increased, and the defeat of a half-cent sales tax measure last year raised questions about its willingness to meet its obligations. To induce buyers to purchase this week’s bonds, the county had to buy insurance and pay a higher rate.

It also was forced to mortgage county properties and offer them up as collateral. To create a revenue stream, there was a diversion of money that would have gone for bus service, new parks, beach improvements and repaving roads. Instead, the funds will be paid to the bond buyers.

The former treasurer who bet wrong on interest rates and caused the investment pool loss has pleaded guilty to six felonies and awaits sentencing. New oversight committees and promises to avoid risky investments are designed to avoid a future financial calamity.

Orange County now awaits only a Bankruptcy Court judge’s approval, expected next week, to end its bankruptcy officially. Everyone who cares about Orange County is cheered by the arrival of resolution, and sobered by the knowledge that the fallout of bankruptcy will be in the air for many years to come.