MOORLACH UPDATE — Twitter Musick — October 9, 2013

Yesterday’s Board meeting agenda was short, but the discussion on two important topics was not. And the Voice of OC covers the two items that received the most attention during the morning. First, the Orange County Sheriff’s Department’s (OCSD) request for approval to apply for an $80 million grant to build two housing modules which would add 384 beds at the James L. Musick facility. This would most likely move inmates from the tents that many are residing in at the current time. Consequently, the new facilities would provide more protection for those living near the facility. OCSD will be one of fourteen out of sixteen urban counties competing for three $80 million grants. The Board voted unanimously, after a thorough discussion, to allow OCSD to apply. Should OCSD be one of the successful applicants, the matter will return to the Board in order to approve the receiving of the grant.

Second, the Board addressed a concern that surfaced last week concerning a delegated authority to the Orange County Fire Authority (OCFA). Of late, there have been published stories concerning OCFA and its charging for inspections when they were not done, for disabling seat belts, and now the issuance of an e-mail to current ambulance providers that seemed to undermine the integrity of the request for proposals process. One starts to get a little nervous at the trend, especially when the OCFA has a 25-member board of directors that are not directly elected (they are representatives from 23 cities and two from the Board of Supervisors). The Orange County Transportation Authority board of directors has been receiving similar accounts of poor fiscal accountability with regards to sister agency MetroLink. In my opinion, it’s all about policies, procedures and oversight. I’m just asking for better oversight from the OCFA, which is a reputable agency, of their roles and responsibilities.

BONUS ONE: The LOOK BACKS below provide another perspective on the tenth anniversary of the Gubernatorial recall election (as well as catch you up after a few quiet days).

BONUS TWO: Forgive the short notice, but if you’re going to the USC Football game tonight and you want to avoid the rain, consider taking the special MetroLink train. See http://metrolinktrains.com/news/promotions_detail/title/usc_football_express.

BONUS THREE: The fact that Halloween is coming up is just a coincidence, but the term of the Second District’s appointee to the Orange County Cemetery District is expiring at the end of this month. If you are dying to serve on this Board, for the term starting January 6, 2014 to January 4, 2016, please let Cammy Danciu of my office know at Cammy.Danciu.

BONUS FOUR: I have joined the realm of Twitter. If you Tweet, follow me at https://twitter.com/JohnMWMoorlach

County Seeks $80 Million for Irvine Jail Expansion

By NICK GERDA

The Orange County Board of Supervisors voted unanimously Tuesday to seek $80 million in state funding to expand the James L. Musick jail between Irvine and Lake Forest, as city officials gear up for a lawsuit over the issue.

The request for grant money to fund 384 new “rehabilitation beds” comes as the state, to comply with a U.S. Supreme Court ruling, shifts more and more responsibility for new inmates onto counties.

And city officials aren’t happy about it.

Irvine Mayor Steven Choi told supervisors that he and his council colleagues are “troubled” by the expansion plans, noting a pending lawsuit over environmental impacts that Irvine claims haven’t been studied.

Irvine “urges the county to consider, analyze [and] mitigate the impact of those changes at both the policy and the environmental review level,” said Choi.

He explained that Musick lies right next to the Orange County Great Park, which is surrounded by about 5,000 planned homes that could grow to 9,500.

Irvine officials have also raised questions about whether this is just a first step to expanding the facility to house even more inmates.

To ease those concerns, Spitzer tried to insert language into the county’s approvals to “make it unequivocally clear that this is limited” to 384 beds.

While Spitzer was ultimately successful in adding the language in some areas, supervisors didn’t approve the changes in other areas due to concerns that it could put the county’s grant application at risk.

“I worry. The state doesn’t love us as much as I wish they did,” said Chairman Shawn Nelson. “It just seems like they’re looking for reasons to not favor us, and I don’t want to give them one.”

Because the Theo Lacy jail in Orange is built-out and the central jails in Santa Ana are taking bookings from across the county, there’s no opportunity to expand other than at Musick, Spitzer said.

“There’s a ‘what are we going to do with these people’ issue,” he said.

If the county gets the funding, the expansion is projected start housing inmates in late 2019 or 2020. Divided evenly, the construction funding comes out to just over $200,000 per inmate.

The funds are part of SB 1022, which set up a $500 million pot of money from which counties can compete for funding new jail facilities that provide space for treatment and rehabilitation.

$240 million of that is for large counties, with each county eligible for up to $80 million in funds. That likely means that Orange County is competing for what would ultimately be grants to three large counties, officials said.

The U.S. Supreme Court ruled in 2011 that California’s prisons were so overcrowded they caused “needless suffering and death.” Justices ordered the prisoner population reduced by more than 30,000.

On top of that, a federal court recently ordered the state to drop its prisoner population by another 10,000 people by the end of this year.

This has all led to a major shift in the criminal justice system, with a new emphasis on trying to treat the underlying issues – such as drug addiction or mental illness – that contribute to people repeatedly committing crimes.

“Corrections, as we all know, has taken a dramatic turn in the state of California,” said Spitzer. “The fact of the matter is, with [a] 70% recidivism rate, we’re doing something wrong.”

As far as the state’s prisoner reductions, Spitzer said he’s concerned that so-called “low level” offenders – who include people who drove drunk or committed assault – are being pushed onto the streets.

County officials say the new rehabilitation programs will involve social workers, medical experts and nonprofit and religious groups.

The state, however, isn’t setting a standard for how to track the new approach’s success, county officials said.

County officials expect the proposed expansion to cost $17 million per year to operate, though it was unclear from Tuesday’s meeting where that money would come from.

Supervisor John Moorlach noted that without a new funding stream, any additional costs on the sheriff’s department are likely to get absorbed by other departments.

The county expects to find out in January if they’re chosen for the grant, with project approval coming to supervisors for approval next July.

You can reach Nick Gerda at ngerda, and follow him on Twitter: @nicholasgerda.

Fire Chief Apologizes for Questionable Email Regarding Bid

By NICK GERDA and REX DALTON – writer (AP)

Orange County Fire Authority Chief Keith Richter publicly apologized Tuesday to county supervisors for what he called an “unfortunate email” that surfaced last week showing a top OCFA executive suggesting special treatment of current ambulance vendors in a bidding process for their contracts.

That Sept. 11 email told current ambulance vendors that they should attend a private meeting to discuss a future call for bids.

Supervisor Todd Spitzer read the email aloud at last week’s public board meeting, prompting other supervisors to so far as to publicly threaten to take away the Fire Authority’s power to conduct ambulance bidding and agendized that action for this week.

However, supervisors ultimately backed down from that threat Tuesday, instead voting unanimously to acknowledge a commitment by fire officials to continually send the county all of their bid-related communications something agency officials said they already do.

“I offer no excuses for this very poorly-worded communication and I accept responsibility on behalf of the OCFA,” Richter told supervisors at the public comment dais during their weekly meeting.

The email’s author, Battalion Chief Bill Lockhart, “now recognizes that it created a very strong impression of impropriety in the mind of anyone reading it,” Richter continued. “While there was no intent to show favoritism to any ambulance provider, he is very sorry for his role in this.”

Richter promised that OCFA staff would ensure that it doesn’t happen again, and recognized the importance of maintaining a fair process for public bidding.

Spitzer called Richter’s speech “powerful,” but reiterated that he was “very, very disturbed” by Lockhart’s email.

Yet it turned out that supervisors couldn’t follow through with their original threat without state approval, with County Counsel Nick Chrisos saying that would be a lengthy process.

Spitzer then noted the new policy he successfully urged OCFA to adopt, saying it’s gotten the attention of the OCFA board and sends a message “that they need to remain diligent in their oversight responsibility” over the bidding process.

The fire authority, meanwhile, said the new policy isn’t much different.

“Does it change what we typically do by procedure? No,” said OCFA spokesman Kelly Zimmerman.

But it does now make it “a definitive requirement” that OCFA send the county every email related to bids.

“It puts everybody kind of on notice that now there’s some teeth in this thing,” he said.

A spokeswoman for the county Health Care Agency didn’t have information on how the new approach differs from current policy.

Zimmerman also took issue with concerns that the bidding process has favored current providers.

“Is the process dirty? No it’s not,” said Zimmerman, adding that no vendors were excluded from attending the meeting in question, and that a second meeting was held the following day specifically for all providers.

He said the first meeting’s purpose was to gather information from current ambulance vendors and let them know about new requirements like 800 Megahertz radios and a new type of insurance.

“We wanted to solicit input from the current providers to see what needed to be different in the process,” said Zimmerman, adding that this approach was normal at the fire authority.

Going forward, he anticipates that the agency will invite all potential bidders to such meetings.

At Tuesday’s supervisors meeting, Chairman Shawn Nelson criticized the fire authority’s initial defense of the email, saying it was “ridiculous and obviously it’s erroneous.”

He credited his fellow supervisors for prompting OCFA’s new communication policy.

The reason OCFA acted so quickly, Nelson said, is because supervisors gave them a “red-light, green-light option…either get it together and behave yourself, or we’ll get it together for you.”

He also noted that four Orange County cities have been in violation of ambulance bidding requirements. As of July, those cities were Anaheim, Fullerton and Buena Park, which haven’t put their exclusive ambulance contracts out to bid in over 10 years.

Nelson said one of the four cities has shown little interest in complying, expressing that they don’t believe the supervisors can do much about it.

Supervisor John Moorlach said recent issues at OCFA including charging for hazardous materials inspections that weren’t performed lead to broader questions about the agency.

“You wonder where’s the oversight and what can we do to help you,” said Moorlach, wondering aloud “if it’s arrogance…or complacency?”

A top OCFA official replied that she and her colleagues understand the gravity of all the concerns.

“We take all of it very seriously and certainly don’t want to appear arrogant,” said Lori Zeller, assistant chief of business services at the fire authority.

Supervisor Pat Bates cautioned that supervisors needed to check the legality of their threats before issuing them. “We need to do a little more research before we take giant steps,” said Bates.

Supervisor Janet Nguyen, meanwhile, said the new policy strikes the right balance in ensuring integrity in the bidding process.

“I actually like the compromise,” said Nguyen.

Supervisors also heard from Mission Viejo attorney Stephen Wontrobski, who was kicked out of the meeting between OCFA and the current ambulance providers.

He said that meeting had been billed as not related to the upcoming bidding process, something he viewed as “entirely deceptive.”

OCFA says Wontrobski was asked to leave under the advice of their legal department, because he wasn’t a potential bidder.

“These are meetings for people who intend to do business with us, so when you have [the] general public there, that doesn’t necessarily bring something to the table,” said Zimmerman, the fire authority spokesman.

Within the next year, 21 of OCFA’s municipal contracts for ambulance service are up for renewal. Care Ambulance Service is currently the dominant provider countywide.

You can reach Nick Gerda at ngerda, and follow him on Twitter: @nicholasgerda.

Rex Dalton is a San Diego-based journalist who has worked for the San Diego Union-Tribune and the journal Nature. You can reach him directly at rexdalton.

FIVE-YEAR LOOK BACKS

October 5

2003

Andre Mouchard of the OC Register provided a unique story in “On the move, quickly – Intrepid reporter takes in seven events in one morning.” The article recounts the reporter’s Saturday events that he enjoyed the day before publication. Here is the 11:25 a.m. segment:

Orange County Market Place, anniversary party, Costa Mesa

In the late 1960s, Bob Teller was an ice cream seller, best known for peddling frozen bananas on Balboa Island.

Then he got into the swap-meet-organizer business, starting Treasures & Trash at the Orange County Fairgrounds. Saturday was the kick-off to the yearlong 35th anniversary of that career change.

“It’s grown into the largest regular weekend event in Southern California,” says Bob’s son, Jeff Teller, who is now a key part of his father’s business.

Between hugs of state politicos and handshakes with guys like county Treasurer John Moorlach, Teller signs off on several forms. His company is giving $35,000 to local charities.

But when it all started, and Dad was still morphing from frozen-banana dealer to outdoor retailer, Jeff was 3.

“I spent the early years of the business riding on my Big Wheel,” he says, grinning. “I’m sure I had the fun.”

I had a fun collaboration with the LA Times editorial staff with the submission “Yes, Alyson, We Do Live in a Financial House of Cards – There are similarities between the county 10 years ago and today,” for their Sunday Orange County Commentary section. With pension obligation bonds being discussed by the County, it was time for a little history lesson and a reality check on the viability of this financing technique. Fortunately, the County did not pursue this debt shifting proposal.

By coincidence, Orange County filed for bankruptcy protection in 1994, shortly after borrowing money to keep its pension plan fully funded. Now there’s talk of borrowing again, which led Alyson Michie of Newport Beach to ask: "When will American taxpayers realize they live in a house of cards?" ("Bond-Investment Plan Is Insane Economics," Sept. 21).

Alyson, I asked this same question nearly 10 years ago when former county Treasurer Robert Citron crafted Orange County’s now-infamous investment strategy.

There are differences between then and now, but there also are troubling similarities. The county’s retirement plan investment portfolio, which is needed to fund benefits promised to current and future retirees, was hurt by a down market in 1994. Now it’s facing the same pressures again.

The county could ease this current short-term pressure on its budget by borrowing funds to keep the retirement fund whole. But the bills eventually must be paid.

This isn’t an issue only in Orange County. Many cities and counties have used and are planning to use pension obligation bonds to fund their pension obligations. But there are two things that must happen to ensure that the gamble works.

To succeed, the government agency doing the borrowing must borrow at a rate that’s lower than the plan’s anticipated and actual earnings rates. The difference between the borrowing rate and what the money earns is known as arbitrage. But accomplishing both is going to be difficult in a volatile investment environment, and this bet could easily become another version of Citron’s "casino" bonds, which also used borrowed money to generate investment funds.

During boom years, long-term pension obligation bond proceeds can benefit from high returns. But if (when?) the return rate falls, the government still must increase cash contributions to keep within retirement fund guidelines.

Who’s to say what a good rate of return would be in this economic environment? We won’t know how we fared until the principal is paid off many years down the line. Maybe someone should place a call to Citron’s infamous psychic?

Interest rates were soaring in 1994, and the Dow Jones Industrial Average was low. This year’s investment environment is reversed. Interest rates are at historic lows, and the Dow Jones is still relatively close to historic highs. Hoping to achieve high returns in the foreseeable future would be optimistic at best. And if the pension plan’s anticipated earnings rate slips, the arbitrage and anticipated profits will be wiped out.

The Orange County Employees Retirement system promises pension benefits for the county and many local cities. Though the fund is one of the best-performing public defined benefit pension plans in the nation, it is underfunded by close to $1 billion.

The stock market is not fully to blame for the huge shortfall. Nearly 65% of the under funding was driven by increased employee benefits. And two-thirds of these increases are tied to decisions made by the 2001-02 Board of Supervisors, including a 50% retirement benefit increase for public safety employees.

When the county last issued Pension Obligation Bonds in late 1994, interest rates were rising and the county was hard-pressed to squeeze out a minimal savings from arbitrage. Unknown at the time was that Citron was scrambling unsuccessfully to find cash to pour into his troubled hedge fund. He lost that race, and the county filed for bankruptcy protection. Ironically, the gamble eventually paid off.

While the county was working itself out of bankruptcy protection, the nation entered one of its longest bull markets. Lower interest rates lifted the bond market and sent equities soaring, pumping funds into the county retirement plan. But those gains were, by law, stuck inside the plan and couldn’t be used for other county expenses.

A clever arrangement was struck. The county asked for permission to use the 1994 proceeds over time to pay off a portion of future required contributions. This unique cash bonanza eased short-term pressures on the strapped budget. But it’s a case of borrowing from Peter to pay Paul, because the county will burn through the remaining funds in three or four years. That will create a financial crisis for a future board of supervisors. The 1990s bull market also allowed the county to lower contribution rates to the plan, but those savings were spent, not stashed away. The result is the "perfect storm" that our prior CFO warned about. No wonder he retired.

These realities led the county’s Public Financing Advisory Committee to table the Pension Obligation Bond for further study. Let’s hope the study focuses on fixing our budget instead of papering over it.

The Pension Obligation Bond is an idea worthy of study. And maybe it should be looked at again when the investment market’s wind is at our back.

But it’s a bandage, given the financial realities facing Orange County. The current group of elected supervisors may be gone when the perfect storm hits — and the next board will be left to clean up the damage. A decade ago, the Board of Supervisors used a major borrowing-to-invest scheme to solve short-term budget problems. The proposed Pension Obligation Bonds proposal appears eerily similar and sends shivers up my spine.

Alyson also observed that "our politicians care only about the short term." She could not have been more right. Alyson, when can you start working for the county? It has 8-month-old CEO and CFO vacancies. Take your pick.

John M.W. Moorlach is Orange County treasurer-tax collector.

2008

The OC Register’s Sunday Commentary section printed my “Rebuttal” submission, titled “Prop. 5, drug sentencing.” I was joined on this piece by District Attorney Tony Rackauckas, Sheriff Sandra Hutchens, and Chief Probation Officer Colleene Preciado. Fortunately, Proposition 5 would fail at the polls the following month, with 59.48 percent of the voters opposed to this particular ballot measure.

The Register’s position on Proposition 5 ["A more humane approach," Editorials, Sept. 28] is wrong. Prop. 5 is not a "modest reform of California’s drug laws and parole practices." It is an expensive and radical departure from current, effective methodologies that is being bankrolled by the ultraliberal George Soros, who heavily financed Proposition 36 in 2000.

Now, Soros wants to foist on us a social experiment that neuters our judicial system, emasculates our probation services and exposes California’s citizens to more costs and increased crime.

Prop. 36, known as the "Substance Abuse and Crime Prevention Act," was touted as a "treatment instead of incarceration" model that would relieve the state’s prison system of nonviolent offenders. Prop. 36 has not decreased our prison population, and our state is already below the national average in sentencing drug-offending felons to prison.

A report recently conducted by UCLA researchers tracking drug offenders found "high levels of new drug arrests among those eligible in the first year of Prop. 36. Prop. 36 was a flawed taxpayer-funded effort that has not worked, and Prop. 5 will fare worse.

Prop. 5 would create a three-track system that expands or replaces components of effective drug diversion programs already in place.

Tracks I and II are diversion programs that have no required drug testing or counseling components. Track I permits offenders with one prior drug offense and another nondrug-related crime to participate and mandates that the criminal charges be dismissed upon completion of a program. It doesn’t require probation supervision to monitor compliance. Offenders can continue abusing substances without any threat of sanctions, and they are not required to pay for the cost of treatment. No jail time may be imposed upon offenders who fail either track. Thus, there is no real incentive for abusers to remain sober.

Track III allows for Drug Courts but effectively strips judges of proven tools to hold offenders accountable. Judges could only impose jail sentences of two, five or 10 days for violators. Drug Courts, which have success rates of up to 70 percent, are successful because they provide tangible incentives for continued sobriety.

The fiscal impact of Prop. 5 is staggering. The Orange County Superior Court estimates that enactment will result in 239,000 more court hearings annually. Los Angeles County estimates that its implementation will cost its taxpayers $84 million annually with no new revenue stream. The state is facing a severe budget deficit. It is irresponsible to introduce mandates that place new fiscal demands on an already overburdened system.

Prop. 5 is opposed by every major law enforcement partner in the county because it will allow many drug offenders and parolees to remain free as an "option" to incarceration. It ignores proven methods to effectively rehabilitate drug offenders.

We support treatment for those who desire to achieve sobriety, but we believe this must be done in a safe and fiscally prudent manner. The "modest" provisions of Prop. 5 fall woefully short of that goal. In Orange County we’re succeeding with Homeless Court, Drug Court, DUI Court and Whatever It Takes Court. Please don’t disrupt an effective system with one that won’t work.

October 6

2003

The Orange County Business Journal dedicated its issue to the 25th anniversary of the publication’s founding. Rick Reiff, Executive Editor of the Orange County Business Journal, prepared a piece, titled “What Does OC Do For an Encore?,” and “asked some local people to look ahead. I was included in the mix (also, the next day, October 7th, California voters went to the polls to vote on four items: Shall Gray Davis be recalled (removed) from the office of Governor?; Selection of one candidate, out of 135, to succeed Gray Davis; and Propositions 53 and 54):

New development will start moving upward, just like any other major metropolitan area with limited real estate.

That’s why serious long-term transportation and infrastructure planning must be pursued, not just the half-baked CenterLine light rail project.

John Moorlach, OC treasurer

2008

Five years later, to the day, I would be back in the Orange County Business Journal, leading off Rick Reiff’s “OC Insider” column, titled “Moorlach Rips Bailout, Paulson; Boone Pickens Teams with Agran.”

Bigger state, same plot: Supe John Moorlach sees “Wall Street greed” and risky leverage as culprits in the financial industry meltdown, as they were in Orange County’s 1994 bankruptcy that he predicted. Moorlach isn’t sure what to do about the current crisis, but he opposes the bailout plan that passed Congress late last week as a bad deal for taxpayers. He says the doomsday scenarios among the plan’s supporters remind him of the dire warnings during the bankruptcy that OC would “crater” if voters didn’t enact a sales tax hike. They didn’t, but a recovery plan still was crafted and the local economy hardly skipped a beat. Moorlach is surprised there hasn’t been more scrutiny of Treasury Secretary Henry Paulson, especially over the Fed’s assistance to his former firm, Goldman Sachs, and to Goldman trading partner AIG. “I think it’s a serious conflict. I don’t know why they’re railing on poor Chris Cox” . . .

October 7

2008

Norberto Santana, Jr. of the OC Register, in a section titled “From the OCRegister.com blog files,” touched on a subject that has been a current theme as well in “OCERS RETIREMENT BOARD APPOINTMENT RUNS INTO TROUBLE.” Tom Flanigan was released as the Chief Investment Officer of CalSTRS in 1998 because then State Controller Kathleen Connell wanted him to liquidate a very well-positioned fixed income portfolio in order to purchase equities in a rising stock market. He refused, citing that the equities were trading too far above reasonable price/earnings ratios. After he was removed, the deed of repositioning the CalSTRS portfolio was done, and the resulting “Dot.Com” bust hammered this retirement system to the tune of billions of dollars in losses (actual and the opportunity costs). Had Flanigan been listened to, CalSTRS would have been a success story of worthy note. Thank you, Ms. Connell, for abusing this retirement system, in order to curry favor and political contributions from equity money managers for an upcoming Gubernatorial candidacy that failed as miserably as the investment strategy you perpetrated. Ms. Connell was a very expensive elected official for this state’s taxpayers! Tom Flanigan is currently serving on the OCERS Board.

Supervisor John Moorlach’s proposed appointment of Thomas Flanigan to sit on the board of the Orange County Employees Retirement System is triggering a significant amount of dust.

The Board of Supervisors was scheduled to consider the appointment at today’s meeting.

Yet amid calls to delay action, it looks like Moorlach is pulling back on the issue. He pulled his nomination off the agenda about 3 p.m. Monday.

So far, there are questions whether Flanigan – who was let go as OCERS chief investment officer in 2005 – has a problematic relationship with a company – Ryan Labs Inc. – selling investment products to retirement systems.

Under a newly adopted state law (AB 246), those serving on public pension boards aren’t allowed to sell investment products in which they have a stake.

My colleague on the investigative team, Tony Saavedra, has uncovered more about Flanigan’s past – which includes being let go by three retirement systems over the last decade.

October 8

1998

OC Register business columnist Jonathan Lansner addressed “Don’t give the CEO too much credit” in an assessment of why the County of Orange was rebounding so well (the economy was doing great). The Treasurer-Tax Collector staff was also doing a great job, as collection metrics were well above the state median for counties at the time. Lansner provided a little humor and perspective on the situation.

Perhaps the most bizarre twist to date in the squabble involving the county CEO’s fate were comments made by Supervisor Jim Silva.

After Tuesday’s vote to extend a contract to Jan Mittermeier, Silva said that one of Mittermeier’s biggest selling points is that her strong reputation on Wall Street saved county taxpayers millions of dollars.

So I asked Silva a day after the battle if he could specifically quantify the millions Mittermeier saved taxpayers.

He recounts working with Mittermeier to plead the county’s case with the bond-buying community. He recounts how the county exited bankruptcy in just 18 months. He recounts how the county has since regained its investment-grade rating from Wall Street. All this on Mittermeier’s watch.

So Jim, Mittermeier gets all the credit?

“It took someone to pull it all together,” says Silva.

But Jim, didn’t the $800 million in bonds sold in 1996 to close out the bankruptcy sell very poorly?

Yes, Silva admits, but he notes those once-shunned and expensive Orange County bailout bonds now sell at premium prices. He says that Mittermeier’s hard work helped change that perception gap.

But Jim, it’s all Mittermeier’s work? And Jim, the county has yet to do little in the way of refinancing that pricey debt. Where are the savings?

Then Silva admits he once had a beef with Mittermeier about his plan to stash unspent funds in an account only for paying down old debts. He eventually won that battle.

So Jim, you’re saying it’s not all Mittermeier? That bond traders – not bond salesman who will say nice things about anyone with huge borrowing needs – won’t pay high prices for bonds simply just because of one person?

“It has been a team effort,” Silva relents.

He credits fellow supervisors. He credits himself. Even drops Treasurer John Moorlach’s name. And, he admits, “We have been blessed with a strong economy.”

Funny, should not a self-described “hard-headed conservative” like Silva show more faith in local commerce, rather than some bureaucrat, pulling the county out of the Dumpster? And this guy led the trashing of a sales tax to end the bankruptcy because such a levy could injure the economy.

Just ask others in county government who have bottom-line responsibility.

Gary Granville, county clerk-recorder, says his department’s revenue – largely fees for property-related documents – is 30 percent above budget this year. Government’s role in the upswing? “I take no credit,” he says. It is all about a booming real estate market.

In Moorlach’s corner, the amount of delinquent property taxes has dropped dramatically. “Number one, it’s the economy,” he says. “We have been very fortunate.”

Granville says politicians often “overlook the economy” and its impact on municipal coffers. And in Orange County lately, “it’s been tough to go wrong.”

Exactly. If county leaders want Mittermeier back because she’s running a smooth shop, great.

But because she somehow had some grand role in the county’s improved financial image? Or has real clout on Wall Street? Clout that saves millions? Hah!

2003

S. J. Cahn of the Daily Pilot provides an article on the big news with “Moorlach: Challenge awaits new governor – County Treasurer pays ‘pay-for-play governing has led to state economic crisis.” The day before, Gov. Gray Davis was recalled. This was only the second time in U.S. history where a governor had been recalled. S. J. Cahn provided the piece based on his attending a speech that I gave the prior morning on election day. For my frustration of the bleakness of the state and the frustration with the Governor subject to the recall, the state had unrestricted net assets of $7 billion on June 30, 2001. By June 30, 2004, it was a deficit of $53 billion. Davis had run through $60 billion in three years! I “estimated that the recall would succeed at 55% to 45%.” The actual results? The recall succeeded 55.39% to 44.61%. Another prediction, regarding reworking “deals with unions receiving pensions to lower spending” is still on the horizon. Stay tuned.

Whoever wakes up this morning as the governor of California faces a daunting challenge.

That was the message early Tuesday morning from a man who has delivered warning cries before: County Treasurer John Moorlach.

"It’s pretty bleak, and obviously some cuts have to be made," Moorlach said of the state’s economy during a meeting of the Newport Beach Sunrise Rotary.

Moorlach, who has been in his post since 1995, stressed that a lack of money coming into the state has not been the cause of the present economic turmoil.

"The problem hasn’t been on the revenue side, it’s been on the spending side," he said, adding that any proposals to raise taxes to solve the problem are "pure baloney."

The worst of that spending he broadly characterized as "pay-for-play" deals between special interests — he mentioned in particular prison guards, energy companies, Indian gaming casinos and state employees who receive a wide array of retirement benefits — and government leaders in Sacramento.

And the worst of the players? Gov. Gray Davis, whom Moorlach referred to as "the most tragic practical joke played on this state."

In this environment, it is no surprise that voters are rebelling, he said.

But it is encouraging, he added as he quoted Samuel Adams: "The tumult of the people is very properly compared to the raging of the sea. When the passions of a multitude become headstrong, they generally will have their course."

Moorlach, himself, rode into office on a wave of county passions following the 1994 bankruptcy, which he had predicted during an unsuccessful run for the treasurer seat.

"Bankruptcy" came up more than once during the talk, only now as an extreme solution to the state’s budget crisis.

If the state declared bankruptcy, it could then rework deals with unions receiving pensions to lower spending, he said.

He also pointed out that he is working on a ballot measure that would cap spending at the average of the previous five years. That way spending growth would be tied to a historical number and not be able to spike during years of economic growth.

The goal, he said, must be to look at everything else before tax increases.

Moorlach estimated that the recall would succeed at 55% to 45% and argued the case for Republican Arnold Schwarzenegger as the best candidate.

"I’m hoping for Arnold, but it could be real interesting tomorrow when you pick up your papers," the Costa Mesa resident said.

"He’ll be a very fascinating person to watch," he said, because Schwarzenegger will not be beholden to special interests or contributors and will be able to dominate

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