Orange County's New Rallying Cry: Slice Government Thinner

TO hear Dan Jones tell it, Orange County is about to ''blow this country away.''

The young activist in local conservative politics is one of a growing army of citizens calling for more than just financial patchwork to mend the worst municipal bankruptcy in US history.

Since Dec. 6, when local officials made national headlines by disclosing a Humpty-Dumpty-size ($1.7 billion) loss from risky investments, lawmakers from Santa Ana to Sacramento have been trying to put the once-fat county portfolio back together again.

But Mr. Jones and a burgeoning number of disaffected taxpayers have in mind something far greater: using the crisis as opportunity to redefine government by ''getting it out of the way.'' That means downsizing and restructuring county administration and management top to bottom, privatizing some services and contracting out others, and selling off government assets.

''People in Orange County are chomping at the bit,'' says the 15-year resident. ''Their frustration with government is massive.''

Nearly three months after county supervisors filed for bankruptcy protection, two county administrative officers and one chief executive officer have already spun through the revolving door of quick fixes. Some 186 jurisdictions, from police to welfare, still await budgetary directives that may help clarify how much they may have to cut -- including school districts that were required by law to invest in the county treasurer's fund.

And residents and legislators are still seeking answers to key questions: How could former County Treasurer Robert Citron operate so independently and for so long the portfolio that began to lose its value way before the bankruptcy filing? How can this crisis be solved as well as avoided in the future? And why is the bankruptcy settlement taking so long to sort out?

Some local governments already have taken lessons from Orange County. Florida has put strict limits on high-risk investments by outside money managers, and lawmakers in Ohio and Texas are writing tough new laws on public-fund investments.

In California, the legislature convened a special session Feb. 17 to deal solely with the Orange County bankruptcy. A proposal put on the table last Friday would strip the Orange County Board of Supervisors of all fiscal authority and turn budgetary matters over to a group of state-led trustees.

Assemblyman Curt Pringle (R) of Garden Grove, who is pushing the county's legislative package in Sacramento, maintains the county can take care of its own problems without a tax increase. ''I want to do everything we can do to reduce the impact of government on people's lives,'' he says. ''I just hope others will be ready for the revolution.''

The revolution may have to wait in line with everyone else. First, the present budget has a $150 million shortfall. Next year's budget, beginning July 1, will be $160 million short, and the county has approximately $1 billion worth of bonds coming due June through August.

Other ideas considered in the special legislative session: allowing the county to expedite the sale of public properties and to privatize its airports.

Esmael Adibi, head of the Center for Economic Research at Chapman University in Orange, says the county has a unique opportunity -- a sound economic base coupled with the political will and public support for less and more efficient government. It could become a ''laboratory for the dismantling of a huge layer of government,'' he says.

New taxes might solve the short-term problem, Mr. Adibi adds, but they will support the old bureaucratic structure and prevent the changes that would prevent future financial problems.

''This is historic, clearly unbelievable,'' says Joel Kotkin, senior fellow at the Center for the New West. While conventional wisdom suggests an urban bankruptcy is related to a weak economy, he says, Orange County has a 4 percent growth rate. The pace of the bankruptcy proceedings has picked up with the Feb. 10 appointment of a new fiscal officer, William J. Popejoy. The first public accounting of the bankruptcy will come tomorrow night at a Board of Supervisors meeting.

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