Living With Bankruptcy’s Lessons
The five-year anniversary of the bankruptcy arrived as the county was arguing over how to spend a substantial windfall of tobacco-settlement money. The debate was instructive on the bankruptcy itself. The price of recovery has been high, but because taxpayers are not paying directly for composition, the sacrifice has been apparent mostly when tough choices on spending must be made.
While many of the dire predictions of December 1994 did not come to pass, the county is living in a very real way with a very costly and prolonged lesson.
The fiscal recklessness of former Treasurer-Tax Collector Robert L. Citron and his lying when questioned in the spring of that year about the true state of the investment pool have exacted a price on parks, libraries, health care, law enforcement and the construction of jails. Were it not for Citron’s losing bet on interest rates, it would be possible for the county to have these services.
For many in Orange County, the choice for dealing with bankruptcy was to keep it out of sight and out of mind. This reality was reflected in the defeat of a sales-tax measure for recovery. This has meant higher borrowing costs and long-term debt.
The county has been fortunate that the economy rebounded from the recession. This made it possible to ride out the back end of the 1990s without paying a more severe price.
On the plus side, Orange County government also has done much to institute better fiscal discipline, with fewer managers and more emphasis on getting services directly to people. Treasurer-Tax Collector John M.W. Moorlach has reversed the casino mentality of public investing that prevailed in his predecessor’s shop and put the county on a solid financial basis for making investment decisions.
The hope that the bankruptcy would produce a government that was more responsive and accountable has not been realized fully. Supervisor Todd Spitzer’s arrival has been an exception to business as usual. Perhaps more confrontational at times than necessary, he nevertheless has made open government a priority by questioning prevailing assumptions about how to conduct county business. And yet in many ways, the kind of arrogance in county government that created a climate where the excesses of Citron were possible has reemerged, especially in the county’s botched stewardship of the controversial El Toro base reuse process.
There are problems that go beyond even the best efforts of the county to reform. In his 1998 book, “When Government Fails,” Mark Baldassare of the Public Policy Institute of California described the vulnerability of county governments to pressures beyond their borders and from the high expectations of residents for services. The recent fiscal catastrophe in Ventura County is an example of continuing difficulties in making ends meet at the county level everywhere. It is still very easy for county governments to get into financial trouble.
To address this in Orange County, the oversight committees have been a good thing and can continue to be so. Other fiscal pressures continue at the local government level: Irvine schools, high rollers in the investment pool of yore, found themselves trying to make up revenue locally with a parcel tax that failed at the polls. The health care advocates and the county administrators are at odds over how to spend windfall tobacco-tax money. These are some of the signs that the challenges of bankruptcy recovery remain.
