MOORLACH UPDATE — Memorial Day — May 26, 2011

First, let me wish you a pleasant Memorial Day weekend.  Please take time to talk to a World War II veteran.  We are losing them at the rate of 1,000 per day.  It’s twilight.  A great way to commemorate those who made the ultimate sacrifice for our nation is to have an in-depth conversation with someone from the Greatest Generation who lived through World War II and get a firsthand account.  It’s twilight.  This month we lost the last World War I combat veteran.  Claude Choules was 110 when he died in his sleep at a nursing home in his adopted city of Perth, Australia.  He lied about his age to get into the military.  We have only one person left, another Briton, who served in the military in “the war to end all wars,” Florence Green, who was a waitress in the Women’s Royal Air Force.  She is also 110.  It’s twilight.

The Performance Audit Department’s Report on the County’s Human Resources Department (HRD) continues to make it into the news; see http://www.ocgov.com/ocgov/Info%20OC/Departments%20&%20Agencies/Office%20of%20the%20Performance%20Audit%20Director.  It was the primary topic of discussion when I was interviewed by Rick Reiff for his “Inside OC” show, which airs today at 1 p.m., Friday at 7:30 p.m., Sunday at 11:30 a.m. and Wednesday at noon, on KOCE (PBS SoCal), see http://www.rickreiff.com/.  (Also see LOOK BACKS below.)

At the conclusion of Tuesday’s Board of Supervisors’ meeting, during the Board Comments section, I gave a directive to our County Executive Officer, Tom Mauk, to include the option of outsourcing our HRD.  We will be discussing the report at our June 7th meeting and I want all options on the table. I believe we should be self-evaluating constantly.  The County has no competitors.  It has no stockholders dependent on dividend checks.  We’re a well run and efficient County.  But, we can always do better.  And we should not fear any studies, audits, or outsourcing opportunities.  I also requested a similar review for our Public Administrator/Public Guardian Department.  When I first became Treasurer-Tax Collector in 1995, one of the first projects I pursued was to determine the cost of outsourcing the investment function and the tax collection function.  Conclusion:  The County could do it less expensively and provide a much higher level of service.  (Of course, this was before the union negotiated a much more generous pension plan benefit, which may tip the scale on the previous cost analysis.)

Roy Reynolds provides an Orange Grove editorial submission in the OC Register on the topic of outsourcing.  His polling analysis also addresses the situation in the city of Costa Mesa, which piggy-backs on my Orange Grove submission from yesterday.

The second article is an update from OC180News.com on the latent powers being pursued by the Rossmoor Community Services District.  (Perhaps they could have used Mr. Reynolds polling abilities?)

Roy Reynolds: Outsourcing is good business

By ROY REYNOLDS

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Recent polling by my firm for the Costa Mesa Taxpayers Association found that 472 registered-voter households, 59 percent of those surveyed, believed the city "should look at all its options to solve the budget crisis, including outsourcing some of its services." Of 803 responses to this question, out of over 27,000 automated calls made only to Costa Mesans, 27 percent answered "No" to the question, and 14 percent were Undecided.

The City Council’s strategy to take bids from private companies for work like vehicle upkeep, street repair and park maintenance is favorable to better than double the households we polled. The city will determine by a fair and competitive process whether it will be less expensive to use profit-motivated companies or unionized city employees to perform maintenance and support activities. We’d expect that contracts will be let to private firms only when it’s clear that the city will save money.

If outsourcing succeeds, and it will, union domination of municipal personnel will disappear as the city tries to shrink a multimillion-dollar budget deficit and mitigate $131 million of unfunded pension obligations.

Costa Mesa is only the first among our local governments that will need to rationalize their operating costs and pension liabilities. Municipalities, counties and states can no longer afford the generous salaries, benefits and unsustainable pensions of captive employees. This City Council will find that outsourcing government functions is simply good business.

When Costa Mesa succeeds in its outsourcing strategy, Orange County government should follow the example and expand on outsourcing appropriate operations.

In a December 2004 column on these pages, Yorba Linda resident Tom Cagley wrote: "Any public department or function … competing with private industry should be eliminated and turned over to private industry. … [I]f there is a private company in the Yellow Pages that can and will do the job, the government has no business in the business."

Responding this week to a scathing audit of the county Human Resources Department, Supervisor John Moorlach was quoted as saying "he wants to consider the outsourcing of the entire … department."

Recent controversies at the county’s Public Administrator/Guardian offices suggests an excellent opportunity to outsource these departments, whose functions are duplicated by any commercial bank’s trust department. Those functions include discretion, auditability, honest dealing and financial acumen. The Public Administrator/Guardian has no monopoly on these responsibilities. Bank of America, Citigroup, Chase and other institutions have trust operations in Orange County and should eagerly respond to an opportunity to examine the Public Administrator/Guardian’s organizational chart, budget and business plan.

Orange County government outsources other functions, like information technology and certain health care activities. Its public works projects are bid to private firms, so the concept is hardly untried. Low bidders, after proper vetting and reference checks, are going to save money via the competitive nature of the bidding process. Governments by definition are monopolies, and injecting market competition from the private sector has to drive down costs.

It’s high time government was more competitive and acted more like a business, with shareholders and customers to satisfy. Let’s strongly consider Supervisor Moorlach’s idea and start with outsourcing the well-studied Public Administrator/Guardian, save some money and remove its operations from the political influences that have caused it to become a public spectacle.

Rossmoor Public Hearing Set On Authority For Police Powers, Refuse Collection, And Animal Care Services

Dolores Barr, Editor and Publisher, OC180NEWS.com

The Rossmoor Community Services District yesterday issued a notice of public hearing, indicating their intent to move forward with application for authority over police services, refuse collection, and animal control services. The RCSD issued the following statement:

“At their Regular Meeting on April 12, 2011, the RCSD Board of Directors set a date for public hearing to consider a resolution of Application to LAFCO [Local Agency Formation Commission, the agency which decides on these issues] for additional latent powers. These would include police services, animal care services and refuse collection services. A public hearing is a requirement of the LAFCO Application process.”

In addition to the requirement for a public hearing, which may, or may not provide adequate public input, LAFCO will be looking for a strong indication of community support for the expanded powers. Since John Moorlach is the Chairman of LAFCO and he is on record as opposing the idea of granting more authority to the RCSD, the application doesn’t have much of a chance unless they can demonstrate a broad base of community support. For this reason, the RCSD hired a polling firm to conduct a public opinion telephone survey of Rossmoor residents. The RCSD statement continues:

“At that same meeting, the Board heard a presentation by Probolsky Research on the recently conducted poll of the Rossmoor community. The poll was intended to give the Board a sense of the community regarding the Board’s intention to apply for additional latent powers. Adam Probolsky told the Board, “…that the survey of 300 residents was more than sufficient to obtain accurate results and true opinions from the community”.

After public input, the Board then set the date of hearing for: June 14, 2011 Rush Park Auditorium 3021 Blume Drive 7:00 p.m. “Two reasons for setting the hearing in June are for the Board to have selected an individual to fill the vacant Board seat and also for the General Manager to obtain additional information regarding allocation of property tax revenue back to the District for providing current services and additional services. Should the Board vote to move ahead with the filing of an Application to LAFCO, they would do so by adoption of a resolution of the District’s Board of Directors. The public is urged to attend and give testimony.”

Of course, RCSD needs a lot more than public support before LAFCO will grant RCSD the additional powers – they must prove they can pay for the additional services. The RCSD seems to be hoping they can convince Orange County to hand over a greater share of the property taxes paid by Rossmoor residents. These additional funds could then be used by RCSD to pay for police, refuse, and animal control services. The residents of Rossmoor last year paid about $17 million in property taxes. Of that amount, only $1.4 million, or 8%, came back to the RCSD. Orange County kept the rest to fund all the other services provided to Rossmoor. By comparison, for cities, such as Seal Beach and Los Alamitos, who handle their own police, refuse, and animal control services, the county gives back about 16% of the property taxes paid by the residents of those cities.

FIVE-YEAR LOOK BACKS

2006

May 26

The OC Register is very good about announcing “Memorial Day Observances.”  Five years ago, I had the privilege of sharing how those who served our country in the European arena had a tremendous impact on the lives of my family.  Freedom is not free.  This announcement was printed in every edition up to Memorial Day.

                Costa Mesa:  11 a.m. Monday at Harbor Lawn-Mount Olive Memorial Park, 1625 Gisler Ave.  Speaker:  Orange County Treasurer-Tax Collector John Moorlach.  Also:  All-American Boys Chorus, wreath laying, taps, 21-gun salute, releasing of 100 doves.  Free hot dogs and soda after service.

May 28

Jonathan Lansner of the OC Register had the lead article in the Marketplace section with “O.C. plays catch-up on property tax bills.”  If you recall, at that time the great debate centered on whether the real estate market had peaked or whether it was still enjoying its upward trajectory.  Anyone with a contrarian view, i.e. the market had topped, would be castigated in the media.  Consequently, Lansner was looking for any signs to provide an indication of a directional change.  Of course, I called the top, prematurely, in 2004, but was exonerated when home prices eventually fell below 2004 levels.  Here are selected paragraphs (with Lansner’s closer being very prescient):

                It was a shock when the county revealed earlier this year that taxpayers skipped making last December’s installment at the fastest delinquency rate in a decade.

                Now come fresh figures from the local tax collector that show that December’s late payments weren’t as ominous an economic signal as they first appeared to be.

                Orange County residents managed to scrape together $57 million to pay off late December bills.  As a result, missed payments on that first tax installment are now down to $26 million, or 1.35 percent of the amount due.

                As for the second payment that was due in April?  The news is far better.  The county’s still missing $78 million, or 4.1 percent of the amount due.  That’s an improvement from the previous year’s pace.

                “I was a little surprised that the numbers firmed up as much as they did,” says John Moorlach, the county’s treasurer/tax collector.

Still, modest applause is due our local property owners.  For whatever reason, most of our laggards displayed noteworthy economic muscle by settling their tardy bills.

That check-writing spree signals that a host of possibly budget-crimping economic trends has not yet delivered a knockout punch.

There was also a kind Letter to the Editor in the OC Register, titled “A county treasure,” under the main heading of “Cast your Election Day ballots wisely.”  Thank you, Krissy Alonzo.

                County Treasurer John Moorlach has been the sole voice of reason when it comes to county finances and I will vote for him as county supervisor in the upcoming election.  Sound fiscal policies and clear thinking are rare in politics.

                Let’s not let this opportunity pass us by.

                Krissy Alonzo

                La Palma

The Daily Pilot had a “Notable Quotables” column that included the following from its May 24 edition:

"I feel like it’s me against the unions as opposed to me against a candidate," he said. "What they don’t like about me is that I’ve been very vocal about the benefits that they’ve been able to achieve. This last bargaining agreement was very detrimental to the county."

John Moorlach on his candidacy for a seat as Orange County supervisor

May 29

It was days away from the 2006 primary.  Rick Reiff of the Orange County Business Journal weighed in with a half-page commentary, titled Moorlach and Street,” that handicaps the races in a fair and thorough manner.  Here it is in full.

TO QUOTE YOGI BERRA, IT’S LOOKING LIKE DEJA VU ALL OVER AGAIN.

On a June 6 ballot filled with competitive local races, none are more important for sound and fiscally responsible county government than the two contests involving the current county treasurer and the man who wants to be his successor.

Flash back to 1994. A CPA named John Moorlach was running for county treasurer. Moorlach, with assistance from a Newport Beach money manager named Chriss Street, warned that the investment practices of incumbent Robert Citron were leading the county toward financial disaster.

Political leaders rose up against Moorlach. Citron won handily and the reckless investment practices continued unabated. Within months the county, having lost $1.6 billion, filed the biggest municipal bankruptcy ever. There were cutbacks, layoffs and prosecutions. The county is still paying interest.

Fast forward to today. Moorlach, who replaced the disgraced Citron and served as treasurer with distinction for the past 11 years, is running for county supervisor. His tag-team partner again is Street, who is running to succeed Moorlach as treasurer.

They are again warning that the county is risking a billion-dollar financial debacle, this time over lavish public-employee pension benefits.

Moorlach is leaving the virtual lifetime security of his present job to seek a lower-paying, term-limited gig so he can bring financial discipline to the board of supervisors. Street, who recently retired from the investment business, wants to carry on Moorlach’s legacy while putting his own stamp on the treasurer’s office.

Chastened political leaders now are behind Moorlach. But as in 1994, he has formidable opposition, this time from the county’s powerful public employee unions.

The unions, apoplectic over the prospect of having to negotiate wages and benefits with a Moorlach-driven board of supervisors, are expected to pour the better part of a million dollars into ads ripping Orange County’s most upright politician.

A hit piece claims that Moorlach is "an anti-union radical who will destroy your pension" Phone calls wildly insinuate that Moorlach is in cahoots with Citron’s enabler, Merrill Lynch.

A new mailer scrounges up an innocuous technical violation from 1996, Moorlach’s name appeared on a department brochure three times instead of the permitted one, twists the facts, omits that Moorlach himself reported the oversight and imputes a scandal: "How can we trust Moorlach now?"

Moorlach has terrific name-ID, about $400,000 for the campaign and a pushover opponent, schoolteacher and Stanton Councilman David Shawver.

The unions have an uphill battle. But they have been zeroing in on Moorlach and assessing members for campaign funds, so a Moorlach victory can’t be considered a sure thing. And even if they lose against Moorlach, the union bosses will send a message to other politicians who might be inclined to challenge sweetheart pension deals, don’t mess with us.

A Street victory would be a blow to the unions, too, as he would move into the pivotal treasurer’s seat on the Orange County Employees Retirement System board.

However, unless the unions decide to siphon money away from the Moorlach attack, the mostly self-funded Street should easily outspend an opponent who is even more obscure than Moorlach’s, Pat Desmond, an employee in the county assessor’s office.

But Street lacks Moorlach’s name recognition and his cockiness can be off-putting. His demonstrated financial savvy from years in the Wall Street game is an impressive asset for a treasurer candidate. But Street also brings baggage from his days in the rough-and-tumble world of corporate workouts, in the form of a battle over his management of the bankrupt Fruehauf Corp.

A bankruptcy filing by Street’s successor at Fruehauf, Daniel Harrow, accuses Street of mismanagement, lavish spending and conflicts of interest that damaged the company and its pension plan. Street has rebutted all of the points, maintained that his work benefited both creditors and pensioners, and sued Harrow for defamation.

Still, some politicians have pulled their endorsements of Street and DA Tony Rackauckas has launched an investigation.

What to make of it all? If Street is right, the allegations are groundless. If Harrow is right, Street played fast and loose with Fruehauf.

Even accepting the latter scenario, Street comes out ahead after you weigh his investment experience and his public service, at Moorlach’s side in warning of Citron, and then in helping Moorlach to reform a problem-plagued county pension board, against the slim credentials of an opponent who suggests there is no pension problem.

So there you have it: On one side, union interests. On the other side, the two guys who 12 years ago correctly warned the voters that Orange County government was headed off a cliff, and now are warning the voters again.

This time, will the voters take heed?

Rick Reiff

(Disclosure: Moorlach and Street are friends of mine, and Street is a past sponsor of my KOCE television program, "Inside OC.")

Jean O. Pasco of the LA Times also provides a synopsis of the campaigns in the OC with “Spiteful Accusations, Hard Cash Mark Primary — Charges fly in the sheriff’s race, costs soar in a supervisor’s contest, and even the race for treasurer/tax collector has turned nasty.”  It will give you a flavor of the times.

First off, there’s the explosive race for sheriff, in which the incumbent has been asked to resign by two of his challengers. Then there’s the combative –and expensive — battle for a supervisor’s seat in normally staid South County. Two other supervisor posts are also at stake.

Even the treasurer/tax collector race has turned nasty, with several county leaders withdrawing their support of the presumed favorite.

Welcome to the Orange County primary.

The major countywide race is the battle for sheriff, pitting incumbent Michael S. Carona against one of his lieutenants and a Los Angeles County sheriff’s commander.

Lt. William Hunt, who is in charge of police services in San Clemente, and Cmdr. Ralph Martin have criticized Carona for a series of department scandals — including hiring political allies as assistant sheriffs, one of whom quit after his son was arrested for sexual assault and the second of whom was indicted on charges of bribery and accused of misusing county resources.

A third challenger, former deputy Robert Alcaraz, quit the race last week and endorsed Hunt, though his name remains on the ballot.

Despite the volatile nature of the sheriff’s contest, Orange County residents could feel the most impact from the outcome of the three supervisor races, which represent a majority of seats on the five-member Board of Supervisors.

Two of the seats are being vacated because of term limits — Supervisor Jim Silva of Huntington Beach is running for an Assembly seat; Tom Wilson failed in his attempt to move to the Assembly in 2004. Supervisor Chris Norby is the only incumbent facing reelection.

Among those seeking to replace Silva is the county’s treasurer/tax collector, John M.W. Moorlach, appointed in 1995, shortly after the county declared bankruptcy in December 1994. Moorlach had run unsuccessfully against the longtime incumbent, Robert L. Citron, whose risky investments imploded, leaving the county $1.7 billion in the red.

The 2nd District includes all or parts of Costa Mesa, Cypress, Fountain Valley, Garden Grove, Huntington Beach, La Palma, Los Alamitos, Newport Beach, Seal Beach and Stanton.

Moorlach has sounded fiscal alarms again this year about the growing annual bill needed to cover generous pension perks granted to county employees in recent years. Union leaders have disputed his warnings, saying workers are helping cover the county’s pension responsibility and that the system is sound.

Moorlach’s sole opponent, Stanton Councilman David Shawver, has been endorsed by a coalition of county employee unions. The Assn. of Orange County Sheriff’s Deputies has mailed campaign brochures supporting Shawver.

The most heated supervisor’s race involves a former assemblywoman and a city councilwoman who have spent more than $1 million combined. The bulk of the spending is by Laguna Niguel Councilwoman Cathryn DeYoung. She says she has contributed her own money to give her familiarity with voters equal to that of former Assemblywoman Pat Bates, who was termed out of her legislative seat in 2004.

DeYoung’s aggressive mailers, including putting Bates’ picture on a Mexican consular ID card, were challenged in court but allowed by judges. Both campaigns have focused on regional transportation and illegal immigration, even though supervisors have little to do with the first and virtually nothing to do with the latter.

The other candidates for the 5th District seat are former Laguna Niguel Councilman Eddie Rose and educator Gary V. Miller. The top two vote-getters will be on the November ballot if no candidate wins a majority.

The district includes Aliso Viejo, Dana Point, Laguna Beach, Laguna Hills, Laguna Niguel, Laguna Woods, Lake Forest, Mission Viejo, Rancho Santa Margarita, San Clemente and San Juan Capistrano.

The race for 4th District supervisor pits Norby, elected in 2002, against La Habra Councilwoman Rosie Espinoza, who won national recognition for Rosie’s Garage, an after-school tutoring program. Espinoza said she decided to challenge Norby because of his opposition to her hometown’s attempts to lure a Costco to town.

The city also sued the county over development of a park; the county settled the lawsuit for $5 million.

The 4th District includes all or portions of Anaheim, Buena Park, Fullerton, La Habra and Placentia.

Other contested countywide races include investment advisor Chriss Street and Patrick Desmond, an auditor in the county assessor’s office, battling to replace Moorlach as treasurer/tax collector.

The three candidates for assessor are incumbent Webster Guillory, former county appraiser Larry Bales and Mike Lebeau, a liaison for the state Board of Equalization.

In response to Steven Greenhut’s OC Register column of May 21, there was a response in the “More Letters to the Editor” section, titled “Shawver’s stellar conservative record deserves notice.”  It was nice to see someone sticking up for my opponent.  (It does make one wonder what a difference five years makes.)

Steven Greenhut has once again defamed me and our city of Stanton [“Moorlach vs. the dragons,” Commentary, May 21].  Unfortunately, Greenhut, who, as far as I can tell, has never visited our city in the 16 years I have been serving as mayor and councilman, has missed what makes our small town of Stanton a jewel in the crown of Orange County.

                Stanton is unique.  For example, while many other O.C. cities are hurting for money, Stanton, under conservative Republican leadership, has a reserve of 98 percent of our general funds monies.  This means that for every dollar in the general fund, we have smartly put away 98 cents in reserve.

                In fact, we have done so well that I voted a few years ago to reduce Stanton’s utility tax because we could cut the tax and still provide the funds necessary to pay for our police and fire protective services.

That’s right, Mr. Greenhut.  We have a Republican majority on our City Council.  The Democrats who were in control of the town in the early 1990s did censure me by a 3-2 vote for my outspoken objections to using $5 million of taxpayer’s money on a non-revenue-generating project.  I take that censure as a badge of honor.

Also, for the record, I was one of the first proponents of the [Gov. Gray] Davis recall.  I collected signatures from more than 150 mayors and elected officials, both Republican and Democrat from throughout California.

Now, let’s talk about Mr. Greenhut’s attacks on Stanton.

We have a new Renaissance Plaza under construction plus hundreds of new homes and businesses springing up everywhere.  Property values are on the rise.  Autobacs of Japan, the equivalent to Sears, is an excellent example of a company who chose Stanton for their first business location outside of their own country.

I will continue to stand up for Stanton.  I have lived in town for 36 years and will make sure the Greenhuts of the world are held accountable for any negative comments about Stanton, its citizens, and its leadership.

David John Shawver

Stanton

Mr. Shaver is a candidate for Orange County supervisor

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