MOORLACH UPDATE — Jefferson County — August 8, 2011

In this week’s edition of the Orange County Business Journal, Executive Editor Rick Reiff has some fun comparing “the OC” with “Jeffco.”   Jeffco is the moniker that reporters in the municipality journals have labeled Jefferson County in Alabama.  Jefferson County, Alabama, is considering the possibility of filing for Chapter 9 bankruptcy because they are having difficulty paying the principal and interest on $3 billion of unique sewer bonds known as interest rate swaps.  The media is portraying this potential municipal bankruptcy as the largest ever in the nation, exceeding that of Orange County in December of 1994.  However, when corporate bankruptcies are compared under Chapter 11, it is usually done by evaluating total assets.  If that rule is applied in the municipal arena, then “the OC” might stay in first place.  That debate makes for fun banter.

The second piece below is Sunday’s Guest Column in the OC Register’s Commentary section.  The author, Professor Fred Smoller of Brandman University, eloquently addresses a topic that deserves more debate, not only at the city level, but also at the county level.  Alpine County has a population of 1,175.  I believe that Sunset Beach has as many residents (at least during the summer months).  As a county government, Alpine has to support five supervisors, an elected Sheriff, District Attorney, et al.  With these kinds of costly inefficiencies, it’s time to seriously look at consolidations and mergers, wherever they are feasible.

INVITATION:

Experience Bolsa Chica on Saturday, August 13, 2011, from 9 a.m.-11 a.m.

Meet at the Bolsa Chica Interpretive Center, located at 3842 Warner Avenue, Huntington Beach.  Be prepared to:

       Discover wildlife in urban Huntington Beach

       Take a guided tour of the Bolsa Chica Wetlands

       Learn about the history, wildlife, and restoration of the wetlands

       View exciting and interactive exhibits at the Bolsa Chica Interpretive Center

Please bring closed-toe shoes, drinking water, sunscreen/hat, and camera/binoculars.

RSVP:714.834.3220 or by email: District2@ocgov.com

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Oklahoma Billionaire In Cathedral Drama; BK Bragging Rights

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If Jefferson County, Ala. files for bankruptcy over $3 billion-plus in derivative-fueled debt, commentators are saying it will set a new standard for municipal failures, eclipsing the $1.7 billion investment loss that triggered OC’s 1994 bankruptcy. Not necessarily so, says Supe John Moorlach, the Cassandra of the OC default. He says Jefferson County’s struggle to make bond payments is apples to the oranges of OC’s spectacular meltdown, which was akin to a run on the bank. And, Moorlach says he’s sure OC’s bankruptcy petition listed more assets. “I want to keep the record!” he says with a chuckle.

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Fred Smoller: With O.C.’s cities, less is more

By FRED SMOLLER

Orange County ranks as one of the most "city happy" counties in California because Orange County residents like it that way. However, our preference for "local control" is a luxury we can no longer afford (unless we are willing raise taxes), so cash-strapped cities are looking to alternative ways to deliver services. Options include contracting with regional agencies, merging services with other cities, and privatization and outsourcing. Let’s look at each:

County contracting

Orange County has 34 cities. Of these, 22 cities – mostly in South County – contract with the Orange County Fire Authority. Eleven other cities have their own fire department. La Habra contracts with the Los Angeles Fire Department. OCFA maintains that it can deliver the same level of service for millions of dollars less than many city-run departments, such as Brea, Fountain Valley and Costa Mesa. One has to ask whether fire behaves differently in fastidious Irvine (population 213,000) – which contracts with OCFA – than it does in tiny Brea (population 40,000) whose City Council rejected OCFA’s proposal because of its desire for "local control."

Another advantage of regional approaches is policy coordination. Fire departments in North County cities were established when the county was sparsely populated. Stations were sited in order facilitate response times within each city. However, as cities were built out – and Orange County became the second most densely populated County in the state, right behind the City/County of San Francisco – this "city centric" approach resulted in proliferation of fire stations and overlapping jurisdictions. For example, Costa Mesa’s fire department has a fire station that is less than a mile from one in Santa Ana’s fire department. Doesn’t it make sense to locate fire stations from a "county centric" perspective before the "Big One" hits?

Merging Services

A recent story by the Register, based on a grand jury report, said that it "cost $52.6 million last year to pay the top tier of O.C.’s elite executives." As I have asked earlier, why does it take seven cities to deliver services to half the county’s residents and another 27 to provide services to the other half? The establishment of cities over the past 100 years has resulted in a proliferation of local government agencies and well-compensated administrators. City managers aren’t over compensated; I just don’t think Orange County needs 34 of them. 

Mergers such as the proposal by Supervisor John Moorlach to create a "supercity" out of Los Alamitos (population 12,000), Rossmoor (10,000) and Seal Beach (24,000) herald further contractions. For example, would life really deteriorate if Laguna Woods (population 16,000, consisting mostly of Leisure World residents) and Laguna Hills (32,000) were one city, with a combined population of 48,000 – about one-third that of the city of Orange?

Similarly, does Orange County – one of the safest regions in the nation – really needs 12 police SWAT teams, especially now that crime is at a 40-year low.

Privatization

Sandy Springs, Ga., is a city of 100,000 outside Atlanta. The city is managed by a private company, CH2M Hill. Many cities, such as Costa Mesa, are looking to private companies to run their libraries and jails. Other services will follow.

Cutbacks

The final way in which local government will cope with diminished revenue is to cut services, especially for the poor, handicapped, elderly and politically less powerful.

In the past weeks, our attention has been focused on the fiscal disarray in Washington and Sacramento. However, the time has come for us to revisit the way local government services are delivered and organized. Orange County’s government’s "operating system" – Local Government 1889 – was designed for a county that was home to about 15,000 people. Today, we have more than 3 million. A "software" upgrade is badly needed.

FIVE-YEAR LOOK BACKS

2006

August 6

A letter to the editor in the Daily Pilot by Keith Curry was characterized as a “COMMUNITY COMMENTARY,” was titled “Proud to trust in experience.”  Keith would enjoy a successful campaign a few months later.

S.J. Cahn’s column on July 27 appears to take issue with the endorsements of my campaign for City Council from former Gov. George Deukmejian and Lt. Gov. nominee Tom McClintock (Politics Aside, "Our politicos’ silence deafens at concert hall"). Deukmejian was known for his fiscal discipline and for presiding over a period of sustained economic growth in our state. McClintock is one of the leading fiscal conservatives in Sacramento. I have known George and Tom for more than 30 years, and I am proud to have their endorsements and to call them friends.

Cahn seems to be concerned that local endorsements are more important. What is curious is that he failed to mention that in addition to Marian Bergeson and John Moorlach, my campaign has been endorsed by eight Newport Beach mayors.

Evelyn Hart, Jan Debay, Tom Edwards, Clarence Turner, Gary Adams, Dennis O’Neil, Tod Ridgeway and current Mayor Don Webb know what is needed to be an effective council representative, and having looked at the candidates, all have endorsed me.

August 7

The OC Insider column by Rick Reiff in the Orange County Business Journal was titled “Measure M Holdouts.”  In the August 6 LOOK BACK it was who I endorsed that was important.  On August 7th it was what I did not endorse that wss important.  In fact, it was the lead in for this widely-read weekly column.

                Almost every prominent public official has hopped on the Measure M bandwagon.  But the potential opposition from a couple of fence straddlers – OC Treasurer and Supe-Elect John Moorlach and Assemblyman Chuck DeVore – could still hurt the chances of renewing the transportation tax . . .

August 8

As promised in my recent MOORLACH UPDATE — OC Register — July 29, 2011, the OC Register had an article, titled “The art of the O.C. deal – Questions mount over how Orange County supervisors approve labor pacts under an exemption in the Brown Act,” by Norberto Santana, Jr.  Let me first provide the set up and then my quotes in this Reader’s Digest version of the article:

                When people see the board of supervisors vote on a labor deal, what they don’t know is that most often, an agreement has already been reached in private.

                And it’s perfectly legal.

                “Both sides have an interest in a locked-in deal that the public gets to know about only when it’s a done deal,” said Terry Francke, general counsel for Californians Aware.

                Francke – whose group is noted for monitoring the state’s open meeting law, called the Brown Act – said an exemption in the law allows government officials to negotiate with unionized employees completely in private.

                “Neither side wants it know what’s on the table while bargaining is going on,” said Francke.  “The union doesn’t want the rank and file monitoring what they (sic) doing.”  Elected officials also get an advantage in that “they don’t want their constituencies looking over their shoulder,” Francke said.

                Labor and pension negotiations are a primary focus for Supervisor-elect John Moorlach, who takes office next January.

                He still remembers two years ago, when the contract for the controversial “2.7 @ 55” pension enhancement was unveiled on a Friday afternoon and voted on the next Tuesday.  An earlier “3 @ 50” pension enhancement for deputy sheriffs received almost no public debate at all.

                “It gives no time for public input or review, which means that the unions only have to influence three people,” he said.

                Moorlach said he is ready to push for changes, such as including several supervisors on the county’s negotiation team.

                He notes that there have been longstanding concerns that the county’s labor negotiators are too close to union officials.

                This month, one supervisor relayed concerns to county CEO Tom Mauk after seeing the county’s chief negotiator sharing lunch and champagne with a sheriff’s union official at an upscale Santa Ana bistro.

                “It looks awkward when staff members appear to be cozy with the unions,” Moorlach said.

                While labor negotiations could be done in public, Francke said past efforts to change state law have failed.  “I don’t think the Legislature has the spine or the stomach to change the current rules.  Doing so would, I suspect, alienate organized labor and local government as well,” he said.

                That leaves Moorlach thinking about a recent trend used by lawmakers and Gov. Arnold Schwarzenegger.

                “It sounds like this is something that’s not doable in the Legislature but certainly interesting as a statewide ballot proposition.”

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