It’s been a year since Orange County sought bankruptcy. But predictions of a plunge into squalor by “the wealthy deadbeat” and chaos in the $1.2 trillion municipal bond market proved false.
Still, the home of Disneyland and a median income 60 percent above the national average has paid a price for the nation’s biggest municipal financial humiliation, felt most by its poorest residents.
The grim predictions followed Orange County’s bankruptcy filing one year ago today, made after Treasurer Robert L. Citron’s bad bets on interest rates erased $1.7 billion of the $7.5 billion entrusted to him.
William J. Popejoy, a retired banker who temporarily served free as the county’s emergency chief, later quit in frustration over the unchanged power structure and defeat of a sales tax increase. He predicted Orange County would degenerate into what he called Third World status.
“It was an exaggeration,” he now acknowledges. “But at that point it looked as though we were going to have major cutbacks in the schools.”
Tax opponents seized upon such hyperbole and complained that the new tax revenue would be controlled by the same supervisors who failed to prevent the investment debacle. When voters rejected the tax increase in June, the bond markets decried the “wealthy deadbeat” about to default on $1 billion in debt.
Instead, the deadbeat successfully begged bondholders for another year to pay. Helped by the Legislature, Orange County diverted transport and park taxes, mortgaged property, raised dump fees and imported trash from neighboring counties to strengthen its landfill business.
That created a 20-year revenue stream big enough to let the county sell $550 million in new bonds. The proceeds will ensure current bond-holders, vendors and some other high-priority debts are fully repaid.
The disenfranchised aren’t as lucky.
“Our clients are mainly the indigents, people who need special help, the economically and physically disadvantaged, people in jails, the court system, juvenile camps,” says Marian Bergeson, one of the five county supervisors.
“And there’s not a lot of sympathy for many of these groups.”
The county’s annual general fund budget - money not provided from state or federal programs - is down 41 percent, from $463 million to $275 million a year. That has meant cutting prenatal care for the poor, reduced gang control, fewer prosecutors specializing in family abuse. Battered-women clinics have closed. Some misdemeanors that once brought jail now are excused with fines.
Most people, though, see little change.
Some leaders, like county union chief John H. Sawyer, predict steadily eroding services will someday affect everyone. But so far, buses run. Garbage gets picked up. Police respond to calls. Fires are put out.
sponsored Jargon is confusing, by definition. And the financial world has its own set of cryptic words.