County Ignoring Roots of Its Crises

The latest financial scandal involving the Orange County Planning and Development Services Department is a worrisome reminder of the county’s $1.64-billion 1994 bankruptcy.

After the bankruptcy, the Board of Supervisors enacted safeguards intended to set tighter fiscal controls on county departments. These safeguards included creating a strong chief executive officer with jurisdiction over department heads. The CEO’s office was to oversee each department’s budget, business plan and financial statements. Accountability was called for, not just from the department heads to the CEO, but from the CEO to the board.

In my opinion, however, the county has never dealt with the underlying causes of its financial crises: namely, the universally accepted premise that government jobs are guaranteed for life, and the inherent dysfunction created by bureaucratic self-reporting.

The planning department debacle clearly reflects the fallacy of the job-for-life expectation. Because many new cities have been created, and other unincorporated areas annexed to cities, thousands of acres are no longer under the jurisdiction of county planning.

This has resulted in a substantial reduction in the workload, and consequently, in the planning and development fees collected -- fees that were used to pay staff salaries.

Instead of doing what private industry would have done -- cut the staff to match the reduced workload -- the planning department elected to fill in the missing income by substantially increasing fees charged to developers.

This bailout system worked until a local developer challenged the increased fees in court and a judge ordered the county to reduce them.

About three years later, the planning department received an $8-million loan from the Board of Supervisors to fund operations.

That loan has been consumed, and the department is reportedly now generating a $500,000 monthly loss.

At the heart of the problem here, however, were the misrepresentation and omissions the former planning department director made to the board when he requested the loan. The causes and amount of the shortfall were understated in order to manipulate the board’s conclusions and gain its support.

Since supervisors rely on information supplied by department heads, when the information is flawed (or fabricated), elected officials’ decisions are flawed.

The most likely reason for the planning director’s actions was to protect the jobs of his team, an admirable -- perhaps -- move, but definitely not responsible.

Unlike in the private sector, government employees believe their jobs are secure for life. But job security is no longer possible when the state has a $35-billion, 17-month budget gap, a portion of which will soon be transferred to the county’s shoulders.

Private-sector jobs are guaranteed only as long as there are contracts or business to fund salaries.

The aerospace industry has experienced thousands of layoffs; more recently, Kmart announced about 500 layoffs in Orange County alone.

The reported layoff of 39 planning department employees never occurred. In actuality, 35 were transferred to other county departments. This clearly demonstrates the power of the employee unions and the resultant difficulty in downsizing government bureaucracy.

Another practice the board needs to examine is the planning department’s heavy reliance on planning and building fees. Under this system, evaluations and recommendations on large land developments in particular have been tainted by management decisions that favor job security over good planning decisions.

Most other major counties and cities in California long ago discarded the practice of using developers’ fees to directly finance the salaries of the very people assigned to review and critique development plans. Instead, the fees are placed in other government funds, breaking the direct connection between development processing and planning department income.

Orange County would be well-advised to follow suit, because the current practice leads to decisions that favor the builder and result in ill-planned and ill-timed development.

In spite of the changes brought about by the 1994 bankruptcy, there are still problems in the system. Hiring a new CEO is not the answer, nor is returning to the days when supervisors directly managed the county bureaucracy.

Until some major changes are made in the way government is staffed and until cost/benefit analyses are used to measure productivity, more incidents of financial mismanagement are bound to occur. Change of this magnitude can occur only when a significant segment of the public demands accountability from elected officials and when enough true reform candidates get elected.

This scenario is not likely to occur in Orange County in the foreseeable future.