MOORLACH UPDATE — Bill Lobdell — October 29, 2010

It’s not too often you read from someone in journalism lamenting how he missed my message during 1994 about our former County Treasurer, Robert L. “Bob” Citron.  Today’s Daily Pilot, front page, has such a revelation.

Bill Lobdell came so close to understanding what I was trying to explain; check out the LOOK BACK in my “MOORLACH UPDATE — OC Register — May 7, 2009.”  Reporter Russ Loar was asking all of the right questions.

Bill Lobdell’s column for today is powerful.  He brings us up to date on my “MOORLACH UPDATE — Pension Reform Votes — October 26, 2010.”  I’m still deeply grieving the Costa Mesa City Council’s 3-2 vote.  The old phrase, “penny wise, pound foolish” came to mind after watching the debate on the dais from my home.  The observations made by Lobdell are interesting from an historical and future perspective.  Folks, Costa Mesa is in trouble.

Lobdell: City on course for financial ruin

By William Lobdell, columnist

I’ve learned the hard way to listen to John Moorlach.

In 1994, when he was running for Orange County treasurer-tax collector, Moorlach walked into my office at the Daily Pilot with a foot-high stack of documents.

"It’s all here," said Moorlach, then a Costa Mesa CPA who read financial reports as accurately as NFL quarterback Peyton Manning reads defenses. "Orange County will go bankrupt if interest rates move up even a little. Please, please, please, do the story."

Moorlach handed me what could have been my Pulitzer Prize. And I, editor of the Pilot, let it slip through my hands.

I didn’t understand the complex (and, it turned out, high-risk) investments made by the incumbent treasurer-tax collector, and I lazily bought the political narrative being spun by just about everyone: Moorlach’s wild, the-sky-is-falling accusations were part of his desperate campaign to unseat Orange County’s only elected Democrat.

In the months that followed, Moorlach lost the election, interest rates ticked up, and Orange County filed the largest county bankruptcy in U.S. history. On the day after it was announced, I stopped by Moorlach’s office to apologize.

His voice was hoarse from scores of interviews with the national media, and his eyes red from crying. He looked at me and asked, "Why didn’t you listen, Bill? You at least could have had a Pulitzer."

Fast forward to today. Moorlach — now a county supervisor — issued this month a DEFCON 1 warning to Costa Mesa that it’s on the precipice of financial ruin. The facts he used to back up his claim were sobering.

The city has plowed through $50 million in savings in three years, it’s reduced capital improvement spending by 80%, it’s eliminated 113 positions (about 18.5% of its staff), and it’s relentlessly hacked away at services. The only place left to cut is staff costs, which account for nearly 90% of the budget.

So what do council members Wendy Leece, Gary Monahan and Katrina Foley do this week? Ignore Moorlach’s unassailable analysis and approve multi-year contracts with the police and city employee unions that extracted the mildest of concessions, leaving Costa Mesa’s annual budget still about $6.5 million in the red. (Mayor Allan Mansoor and Councilman Eric Bever voted against the contracts.)

After the vote, the council trio should have been forced to follow up with a motion to lay off 70 more city employees, roughly the amount of savings needed to erase the $6.5 million shortfall. Where else is the savings going to come from?

It gets worse. Moorlach concludes that Costa Mesa’s budget will have to be slashed another 20% to 30% to keep the city running properly (and those cuts won’t even replenish the $50 million rainy day fund).

Watching Jim Righeimer — a council candidate in the Nov. 3 elections — in recent months, I can’t help thinking he sounds an awful lot like John Moorlach did in 1994 — a lone voice of reason detailing a pending financial disaster unless the course is changed quickly. He has campaigned unflinchingly on the need to bring police and firefighter costs in line with budget realities, and he may be the city’s last fiscal hope for sanity.

For that honesty, he’s taken tons of flak from Costa Mesa police officers, firefighters and their supporters, who have dragged out the anachronistic line that any move to reduce their compensation is an assault on public safety personnel.

Please, that’s so pre-Great Recession.

There’s a new fiscal reality that most of us have force fed through layoffs, cuts in wages and health benefits, unmatched 401(k) contributions, total elimination of pensions and other once-standard perks. These days in the private sector, a reduction in pay can almost be taken as good news — at least the steady paycheck and health benefits are still there.

In the meantime, we’ve made adjustments, eliminating everything from vacations and new cars to magazine subscriptions and cable TV. Credit cards have been run up. Second jobs gotten. Houses foreclosed on. Retirement pushed off.

It’s not fair. It’s not fun. But it is reality.

So it’s unbelievably frustrating for cash-strapped taxpayers to watch politicians — from Washington, D.C., to Costa Mesa — refuse to balance budgets by reining in public employee compensation costs because it might hurt their political futures.

Even locally, the local unions are powerful enough to get two self-proclaimed conservatives — Leece and Monahan — to bend to their will, even as the city drowns in red ink.

It’s not a coincidence that the new union contracts were approved in the final council meeting before Tuesday’s election. Five council candidates are running for two seats. Leece, the incumbent, will likely be reelected, and Righeimer is the heavy favorite to capture the second seat. Union officials didn’t want to risk sitting across the bargaining table from him.

WILLIAM LOBDELL is former editor of the Daily Pilot, former Los Angeles Times religion beat writer and a Costa Mesa resident. His e-mail is williamlobdell@gmail.com.

FIVE-YEAR LOOK BACKS

October 29

2000

The LA Times had the following two submittals at the top of its “Letters to the Times” in the Sunday Orange County Commentary section, titled “Supporters of Measure G State Their Case.”

The Times’ editorial of Oct. 22 ("Measure H for Health") certainly needs clarification. This was nothing more than a disguise for more anti-El Toro airport diatribe and an opportunity to vilify the three North County supervisors for their steadfast loyalty to the principles of fiscal responsibility upon which all three subscribed when running for their elected office.

"’Integrity" is the word usually used to describe this character trait of the three proponents of the airport.

The three supervisors support Measure G because it is the only initiative that provides for measurable objectives, a citizens oversight committee to provide fiscal flexibility and accountability.

It was interesting that you mentioned the bankruptcy. The fiscal irresponsibility, such as that exhibited in Measure H, was the principal reason for the bankruptcy, yet you are endorsing it. Measure H will cost the taxpayers approximately $1.74 million per year. To the conservatives like John M.W. Moorlach and the three supervisors (Cynthia P. Coad, Jim Silva and Chuck Smith), that is a significant amount of money. The only way it can be provided is to increase taxes or reduce other needy services, i.e. for urban runoff, youth development, gang prevention programs, parks and recreational facilities, and community revitalization funding.

I agree that initiatives by special-interest groups are certainly no way to operate a government. But when hundreds of thousands of dollars are contributed by HMOs, hospitals and the medical association to enhance their incomes, it is easy to obtain the signatures and to publish slanted brochures.

But please explain how the HMOs can pay their CEOs exorbitant salaries and then plead poverty. The liberal policies of the past that caused the bankruptcy will not be tolerated by the fiscally conservative supervisors, Coad, Silva and Smith.

Many feel that the tobacco settlement money was also intended to repay the county for the past costs of providing services to those with tobacco-related illnesses. Other departments that provide worthy services worked with reduced budgets in order to fund health care needs. Now these organizations also need to be rewarded by sharing in some of the tobacco settlement windfall and not be continually neglected.

The settlement negotiations broke down because the special-interest health care groups insisted on guarantees that regardless of the solvency of the tobacco companies and the vicissitudes of the economy, they would be first in line to receive full funding from the general fund.

Many knowledgeable and interested parties did have a town meeting place to discuss important matters. It was my office, and they readily used it. It is inconceivable that you did not avail yourself of that opportunity. If you had, your credibility and integrity would still be intact.

CYNTHIA P. COAD

Supervisor, 4th District

There were two observations made in your editorial that may give your readers the wrong impression.

Measure G provides a two-tier approach. After the debt is liquidated, 70% goes to health care and 30% to public safety. Over 40 years, 58% goes to health care (higher than the national average of tobacco settlement revenue uses), 25% to public safety and only 17% to debt retirement.

Measure G will save money immediately after it becomes effective, not after the debt is retired and only "from then on." All proportional interest savings on the total bond portion of the debt will be reallocated under the above allocation percentages. In 2002, 5.7% of the bonds will have been retired by the tobacco settlement revenues, generating interest savings of $819,622 (5.658% times $14,486,080), of which $344,241 (42%) goes to health care.

In 2003, it will be 11.5% and increases every year, ramping up to nearly 39%, until these bonds are paid off in 2007, eight years ahead of schedule. Over the regularly scheduled life of these bonds the interest savings resulting from Measure G will provide another $12.7 million for health care.

Measure G is not anti-health care. Quite the opposite. It maintains the integrity of Measure H and allocates a significant portion of the savings from early debt retirement back into health care.

JOHN M.W. MOORLACH

Treasurer-Tax Collector

Orange County

The writer is the author of county ballot Measure G.

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