The County Doesn’t Need State’s ‘Help’ on Consolidations

The Local Agency Formation Commission, better known as LAFCO, is a state-mandated agency charged with the difficult task of trying to right over 100 years of illogical city and special district boundaries in Orange County. In addition, LAFCO reviews and decides annexation requests, determines when communities should or should not form their own city (incorporation) and--most important to Orange County--LAFCO streamlines public services by encouraging and promoting consolidations of cities and special districts. Orange County has 32 independent special districts, many for water or sanitation.

Projections show that the state’s population will continue to climb with Orange County assuming a great proportion of that growth. We all know that revenue to local governments (especially from the state and federal governments) is shrinking--putting pressure on the cities, county and special districts to find new ways to become efficient and share resources. Restructuring government through consolidation of special districts has been suggested in numerous reports. The window of opportunity is open and real; effective change is on the horizon.

Consolidation of multimillion-dollar districts is no simple task. In fact, it is just as complicated and contains essentially the same elements as a private sector merger of two corporations. A great amount of work is needed to assure the stockholder, or in this case the ratepayer, that the consolidation will result in more efficient service, less cost and more accountability. Expert studies must look at debt, assets, compatibility of operations, fee structure, employee pay scales and other details.

Some legislators are offering solutions, while others want to cash in on the publicity of restructuring without regard for the impact on the user/ratepayer. Assembly Bill 556, sponsored by Curt Pringle (R-Garden Grove), would mandate certain mergers and consolidation without any solid analysis showing savings to the public. In addition, the voters would be asked to make uninformed decisions by placing the question of consolidation and merger on the ballot before the studies are done that would tell the ratepayer if it will lower or increase rates.

Not every proposed consolidation is a good idea; in fact, some could actually cost the ratepayers more money. This is why studies are required to be conducted in a public setting by an impartial agency such as LAFCO.

Unlike the mandates of AB 556, LAFCO is required to conduct its business and studies in the public arena, where its decisions are open to public criticism and scrutiny. LAFCO has made great strides in moving toward reasoned and beneficial decisions. It is currently analyzing the merger of Tri-Cities Municipal Water Districts with the city of San Clemente, the consolidation of Coastal MWD and Municipal Water District of Orange County, the merger of Capistrano Valley Water District and the city of San Juan Capistrano, and the merger of Santa Ana Heights Mutual Water Company with either Irvine Ranch Water District or Mesa Consolidated. LAFCO is also studying 18 other water and sewer districts for possible consolidations.

In addition, state legislation passed in 1993 (AB 1335) gave LAFCO new authority to initiate consolidation of special districts, mergers of districts with cities, and dissolution of districts. The new law mandates that before LAFCO initiates any consolidations, studies must first be completed that show a potential benefit to the public. Unfortunately the state did not provide funding in the new law for these studies. However, using the carrot-and-stick approach (it’s better that you do it, or we’ll do it for you), Orange County LAFCO has encouraged the special districts to fund many of these studies. The approach LAFCO has chosen encourages the agencies to begin studying consolidation to find new ways to improve service, better utilize and share facilities and reduce costs to their ratepayers.

The largest study, which is expected to be released this month, is being funded by the five Orange County water districts (Irvine Ranch, Santa Margarita, El Toro, Los Alisos and Moulton Niguel water districts) and includes analysis by an independent consultant on the best consolidation alternatives for 12 water and sanitation districts. The study is paying particular attention to service levels and customer rate savings that could total well into the millions of dollars.

AB 556 is a vehicle for using “government restructuring” as another attempt to dictate Orange County policy from Sacramento. Orange Countians should fight to keep the rights they currently possess through LAFCO. Such vital decisions as restructuring our local governments should continue to be conducted by local officials in the public arena, open to public criticism and scrutiny.