Tobacco Windfall: It Matters How You Slice It

County Treasurer-Tax Collector John M.W. Moorlach, the man who first rode in on a white horse waving the shield of pre-bankruptcy warnings, still is crunching numbers. But some say he is doing it on the backs of the less fortunate.

Moorlach has drafted Measure G, a countywide initiative that if passed Nov. 7 would allocate 40% of the county’s share of national tobacco settlement money to help pay down the county’s $950-million bankruptcy debt, with 42% annually going for health care and 18% for jails.

Moorlach is one of the county’s most popular officials. But health care experts who support an alternative initiative, Measure H, say the former accountant’s effort is misguided and an attempt to gain visibility for himself while promoting Measure G.

Measure H, they note, is backed by a coalition of doctors, hospitals, community groups, and a majority of the county’s elected representatives in Sacramento and Washington. It would spend 80% of tobacco funds for health care and 20% on public safety.

The fight over tobacco money only adds another contentious layer to county politics mired in debate over plans to turn the former El Toro Marine Corps Air Station into an airport. Some community leaders said they fear the treasurer has become a stand-in for the majority on the Orange County Board of Supervisors, who rejected a compromise plan for the tobacco money negotiated with health care advocates.

“I find it unfortunate that [Moorlach] takes that position,” said Jean Forbath, a founder of Costa Mesa-based Share Our Selves, an organization that provides meals, medical services and low-income housing. “I don’t think people are that aware of the political ramifications of what’s going on here. We [in health care] have nothing to prove, but we feel that he is their mouthpiece.”

Marian Bergeson, a former state senator and county supervisor, said she also found Moorlach’s role disingenuous at a critical time when the county has seen six hospitals with emergency rooms close in the last decade.

“It’s a fairness issue,” Bergeson said. “The dollars were designed by the settlement to go to health needs. These are not government dollars, but an asset [for] a very critical problem in Orange County.”

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The county expects to receive about $30 million annually for 25 years under the national tobacco litigation settlement, with annual allotments after 2025 to be determined later.

In an interview, Moorlach denied the allegations and said he wrote the initiative with minimal help from a tight circle of colleagues as part of his “watchdog” function, a remnant of the 1994 bankruptcy.

“If I were politically savvy, I wouldn’t tick off the California Medical Assn. or the Orange County Medical Assn.--they’re major donors, big-bucks contributors,” he said. “I’m not worried about a political career. I’m worried about the right thing to do. And if the voters don’t like me for that, then they have a right to vote me out.”

He added, “Let me ask you, when does a watchdog bark?”

Colleagues say that to those who don’t know him, Moorlach can appear to be overzealous, someone who, via Measure G, seized an opportunity to prove his accounting background. But if it can put the county on a safe financial course, while grabbing some headlines, so be it, they say.

Before Moorlach there was Robert L. Citron, the county’s quirky treasurer-tax collector with a penchant for outsized turquoise jewelry and garish neckties. During his more than two decades in the job, Citron was revered as a financial wizard who parlayed the idle millions entrusted to him by the county and nearly 200 school districts, cities and agencies into $7.4 billion the year before the financial collapse.

But it’s Moorlach’s closeness to the majority of supervisors who seek to build a commercial airport at El Toro that worries many people.

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The same board failed to reach a compromise with the health care leaders on how to spend tobacco dollars, then decided to put it all toward debt reduction. They also filed a lawsuit in an unsuccessful effort to keep Measure H off the November ballot.

Moorlach acknowledged the perception.

“I have talked to people in South County and there is a natural inclination to be anti-G because of those supervisors,” he said. “There’s no argument that there are some strong feelings . . . But G at least gives voters a chance to weigh in.”

Moorlach has denied that supervisors prompted him to draft the countermeasure. In fact, the process began as an idea he had after he returned from a vacation and learned that Measure H backers had succeeded in getting their initiative certified after collecting 115,000 signatures.

The former accountant began toying with the numbers inside an office where the walls have magazine and newspaper stories dated after the bankruptcy with bold headlines calling him a “Local Hero.”

“By just paying more to the debt, we can pay off the [bankruptcy] bonds eight years ahead of schedule and that allows us to also reduce the overall principal. What’s wrong with that?” he said. “You know G will help pay off the rest of our certificates of participation. And together with the savings on the bond debt, we will save $130 million in interest.”

He quickly called County Auditor-Controller David Sundstrom, a friend and colleague, to help confirm the number crunching.

Then he called Tom Coad, Supervisor Cynthia P. Coad’s husband, who after a career as a dentist became a successful investor. Coad’s intervention raised eyebrows among Measure H backers because he is an unpaid staff member in his wife’s office. But Coad’s role was limited, Moorlach insisted.

The result was an initiative that would pay off the county’s debt by 2019, eight years ahead of schedule, Moorlach said.