It Will Be a Long Time Before Bankruptcy Is a Thing of the Past

Proclamations that Orange County’s devastating bankruptcy soon will be a memento of the past are well intended but not an accurate depiction of reality.

More realistically, it will be 15 to 20 years before this and a future generation of county taxpayers pay off the billion-dollar-plus public debt, the residue of the largest municipal bankruptcy in U.S. history.

Consequently, when the final bankruptcy bill is settled probably somewhere around the year 2015, the annual toll extracted from the taxpayer is likely to be in excess of $50 million. The taxpayers will receive nothing in return. The money has been spent already on thin air.

Saying we should not be comforted by well-meaning prophets who declare the crisis is past is not meant to be a negative. Nor is it intended to belittle the work done so ably by the plotters and executioners of strategies that will move the public’s financial business out of Bankruptcy Court in just 18 months. Also, it shouldn’t be overlooked that the county’s losses can be mitigated through possible favorable settlement of lawsuits now pending against Wall Street firms.

For now, however, we must deal with what is and not what might be. What happened, how did it happen and who is to blame are by this time nothing more than divisive issues that avert attention from the critical matters remaining to be decided if some good--any good--is to come from this fiscal debacle.

It is long past time to move on. Moving on means seizing the opportunity born out of the fiscal ruin to rehabilitate an ailing county government and to rebuild shattered confidences in the way the public’s business is done in Orange County.

Time and failed attempts to move away from institutional gridlock have seemingly hushed the public demand to either downsize, privatize, streamline, modernize, consolidate, reinvent, innovate or simply do away with county government.

Despite early vows to the contrary, none of that has so far happened.

For example, the task of reinventing--if that is the correct term--has been assigned to county staff fortified by a consulting firm handpicked by staff without competitive proposals. It is remarkable in conservative Orange County that the bureaucracy is charged with redesigning government.

To be sure, the elected supervisors will have the final say in the resulting handiwork. True, also, was public involvement in the ill-fated proposed county charter that failed at the polls.

Tiring as the issue of redesigned government may be, this is not the hour for frustration or disinterest to win the day.

What county assets could be sold have been sold, what county assets could be mortgaged have been mortgaged and close to $1 billion worth of future tax revenue will be pledged.

Clearly, this bankruptcy has been and will continue to be an expensive exercise in self-government, more than an estimated $60 million in legal fees, court costs, outside accounting fees, extra borrowing costs and consulting services consumed already in addition to the debt.

Simultaneously, the size of government has dwindled only slightly, if it all. The bureaucracy--not intended in the derisive meaning of the term--has been handed the controls of county government, and there are more rather than fewer hoops to jump through than before bankruptcy.

As an example, business items submitted to the supervisor’s agenda now require executive approval beforehand. Mid-level administrative managers can and do reject business items without them being considered by the supervisors. Too, even department budgets are subject to interpretation by administrative managers before making it to the supervisors for judgment.

What does all this mean?

From a management as well as a good government standpoint, decisions are made by staff who do not carry either the accountability or responsibility for the consequences of their decisions.

It also means that the bureaucracy has been empowered by the bankruptcy. It is an indication that not even a fiscal calamity of great magnitude brings about change in government.

The events since December 1994 say something about our staying power as a community, as well as our ability to come together. If we were to leave today, our legacy would be a mountainous debt, a mortgaged government, millions of dollars lost in dealing with this bankruptcy and a government structure that hasn’t so much as budged in crisis.

That doesn’t have to be the case. It will be, however, if it is falsely assumed that we have put this fiscal chaos behind us. There’s a long, long road to travel before this bankruptcy truly is in our past.

Opportunity to do much better awaits us. We should somehow rekindle the spirit of reform--without the mean-spiritedness--that touched us all in the early days of calamity.

It’s time to move on to the job of making things better.