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The Board of Supervisors Doesn’t Get It…..Again
Every time I think of the OC Board of Supervisors, I’m reminded of Mel Brooks’ “Blazing Saddles”. No, not the campfire scene, although I can understand why you would go there. I’m talking about the scene where Governor William J. Le Petomane is meeting with his advisors and insists everyone be as incensed as he is over the corruption in fictional Rock Ridge. Everyone around the table starts saying “harumph, harumph…”. That’s the reaction of the Supervisors as they received the bad news that most everyone else in Orange County already knew.
Wednesday, Superior Court Judge Robert Moss ruled against the county saying they illegally withheld more than $73 million in property taxes from the state. To make matters worse, the figure now looms at $140 million by the time this fiscal year is over. The Voice of OC did a pretty good job of outlining the problem in layman’s terms.
When the county financed its billion-dollar bankruptcy in 1995, state officials allowed them to send a portion of their vehicle license fees directly to bond holders. But in 2007, when the county refinanced its debt, the legislative authorization for the special license fees was not included.
Despite warnings that the authorization should be quickly reestablished, county legislative leaders, lobbyists or staff did not act. The intercept, as its known, was not addressed in any subsequent county legislative platform or by the county’s main lobbyist, Platinum Advisors.
In 2011, Brown’s budget staff discovered the omission and took back the money, prompting an intense reaction from county leaders. Assemblyman Jose Solorio sponsored last-minute legislation to fix the situation for the county, but it failed to make it through both houses of the Legislature.
You read right. The county ignored the problem even when the gaff was first discovered and then, when the state demanded the money to balance their own budget, county Democratic Assemblyman Jose Solorio tried to fix it with last-minute legislation. But, Sacramento Democrats took the opportunity to beat down one of the few Republican strongholds by refusing to pass the legislation in time. Without the legislation, loss of the money was a sure thing.
Nonetheless, the Board of Supervisors convinced Auditor David Sundstrom to withhold payment of property taxes from the state. The state promptly sued the county and the writing was on the wall. As with previous pension lawsuits involving the deputy sheriffs union and the retirement system, the Gang of Five ignored the obvious and argued that the intent to keep the status quo had always been there and so, they must be right (right about now, I am hearing John Moorlach jumping up and down while screaming epithets at Jerry Brown).
From the outset, nearly everyone in the county has warned them the court battle would be uphill. In reality, I don’t think anyone wanted to tell the county it had a zero chance but, in truth, that is what they had.
In a video briefing to public union employees, Orange County Employees Association General Manager, Nick Berardino, said, “It was, once again, county executives falling asleep at the switch,as they did during the bankruptcy, when they forgot to include the $73 million dollars state subsidy when they refinanced the bankruptcy funds.” Berardino did agree that the state is treating the county unfairly by requiring the repayment but also said the county did not do its job in protecting the funds to begin with. Berardino lamented that Supervisors are already ringing the layoff bell and laying the responsibility on the backs of the public employees to balance the budget. “The county did the same thing when it declared bankruptcy in 1994.”
Berardino is not the only one to publicly admonish the county for its lack of diligence. In an Orange County Register article published May 9th, Andrew Galvin alleges the local community colleges pleaded with the county in 2011 not to withhold the funds from the state. The money grab, according to them, would result in a serious shortfall of funds going to community colleges in the area. When the county continued the grab, the community colleges joined the state in the lawsuit.
So, when will the county ever get it right? If this were a trust owned by a private family, they would have fired their lawyers for giving them bad advice long ago. In the case of the Board of Supervisors, they have been led astray time after time and not only by county counsel, but attorney-come-chief-of-staff Mario Mainero as well as a plethora of hired gun law offices who, oftentimes while giving good advice, have been unsuccessful in turning the opinion of the Gang of Five.
I have no idea how much money has been spent, so far, by the Board of Supervisors on this debacle. Any amount, however, is too much when one considers how tight the budget is now. Unfortunately for the citizens of Orange County, the Gang of Five may be planning another play as they appeal the ruling to a higher court. In the best case scenario for them, the judge would delay the transfer of funds until the appeals court sides with the trial court. That would be a temporary fix at best. Eventually, the money would have to be repaid. What the Supervisors might want to look at is negotiating a payment schedule. Given the animosity the OC GOP has garnered in recent years in Sacramento, our Democrat governor may turn a deaf ear. Better get that checkbook out, John.
I Am Running For Governor….No, Wait……I Mean Auditor-Controller…..No, Wait….I Mean Assemblyman. Yeah, That’s It, Assemblyman
Courtesy of The Liberal OC
Gosh, I remember when County Supervisor, John Moorlach, was first elected office. One of the things I remember most was his admonition that he had no interest in running for higher office. In fact, he was adamant that he was only taking the job of supervisor because he felt the need to right the wrongs of the previous supervisors, particularly in regard to pension reform. Never mind the fact that he, himself, took the best pension available and is one of a handful of executives in the county that does not pay into his own pension. He not only refuses to apologize for that fact, he revels in it, at one time saying he would change his pension when everyone else changed theirs.That’s real leadership for you.
Moorlach is best known for predicting the infamous 1994 county bankruptcy caused by Robert Citron’s blackbook investments of county funds. To be clear, John didn’t (or couldn’t) do anything about it – he just predicted it would happen. Well, leave it to an accountant to rain on the county’s parade. In the aftermath, he really did nothing more than say, “I told ya so”. Thing is, as we have said before, it is questionable in many expert opinions as to whether the bankruptcy would have occurred at all if Moorlach hadn’t delivered his sky-is-falling message to the public, forcing the OC BoS into action.
But, I digress.
A few weeks ago, I was surfing the web and came across a Voice of OC video article about John Moorlach, saying he was “exploring” a run for Governor. I nearly fell out of my seat, laughing. Nonetheless, I hit the switch to listen to the video. I was greeted with VOC’s editor-in-chief Norberto Santana who interviewed Moorlach for PCS SoCal. “You’re going to have Jerry Brown who was brought to the table by the public employee unions or someone who’s representing the taxpayers, so there’s a very clear delineation…”, according to Moorlach.
Wow. that was pretty straightforward and typical of Moorlach, who sees himself as a champion of the (ultra-conservative) taxpayer. Santana pointed out one of his biggest problems, however. As we said, Moorlach enjoys the most lavish pension available to public employees and has refused to give it up at every opportunity. Santana also pointed out that Moorlach has not been the best at fundraising and that any Republican running against Jerry Brown would have an uphill battle. To my own way of thinking, Moorlach running for governor would all but seal a second term for Brown.
Then, all of a sudden, I was perusing the Orange County Register a few days later and came across another article titled, “Moorlach may run for county auditor”. That isn’t to far from John’s roots and I found the prospect interesting. For all the criticism I have had over the egotistical Moorlach, I have to admit he is a pretty good manager. That said, He would probably be a good fit for the position and he helped along his own cause by voting to appoint Jan Grimes as the new Auditor-Controller to fill David Sundstrom’s unexpired term. The fact that she told the board she was not interested in running for the post at the end of the current term probably helped John make up his mind. In any case, the Auditor-Controller is one of those elected positions that no one really wants. That would make it easy for Moorlach to slide into the position without too much fundraising effort. Moorlach was nice enough to say that, if she did run, he might not want to get in the way of that. We’ll see.
So, John was set. He would run for auditor…or, governor….or….assmeblyman.
Yes, in another turn, the information began running rampant of a swap of seats between Assemblyman Alan Mansoor, who cut his political teeth on the Costa Mesa City Council, and our inimitable hero. It started with OC Weekly’s R. Scott Moxley breaking the story on Mansoor returning to the Real OC for a deathmatch between him and the carpet bagging Michelle Steel for John’s seat. Out of the box, Mansoor is the decided winner. In another weird twist, Moorlach said that, should Mansoor decide to return to the OC, he would be interested in his job in the Capitol. Well, it ain’t the governorship but…
…the Daily Pilot, provides a new twist to my potential journey. Allan Mansoor has practically grown up in the Second District. He has served on the Costa Mesa City Council, which means he is familiar with the Board-type form of governance, and is familiar with negotiating with collective bargaining units. He’s also a former Orange County employee, so he is very familiar with the County and its functions and structure. As a sitting Assemblyman, he will make a formidable candidate to be my replacement. However, he can only run for one office next June. If he runs for Supervisor, that leaves his Assembly seat open and provides me with another option to consider as I near the conclusion of my listening tour.
So, now we have three scenarios for Moorlach with no clear direction. One thing is clear: what was once a career public employee has now clearly become the perennial career politician. Timing in politics is everything and the timing is right for Moorlach to pick and choose his next direction. One thing for sure, his demonstrated lack of leadership as a member of the board of supervisors won’t slow him down but his failure to lead just may catch up to him in any future job. Also, in all of this there has been a distinct lack of discussion from the political powerbrokers in Orange County. That said, I wouldn’t hold my breath to see governor in the future of Mr. Moorlach.
Moorlach Strikes a Blow at Free Speech
As reported in the Orange County Register, The Orange County Board of Supervisors dealt another blow to free speech at county meetings.
A few weeks ago, John Moorlach initiated a proposal to limit the amount of time a member of the public may speak during an open session of the Orange County Board of Supervisors. It was narrowly defeated 3-2 with Bill Campbell among those who chose to preserve 1st Amendment rights rather than punish the general public for the sake of a sole gadfly.
Michael Klubnikin, who has legal and personal issues with the Superior Court and the Public Guardian, has taken a somewhat creative approach over the past few months to harangue the Gang of Five. Rather than prohibit him from speaking on issues because they either have been brought up before or because they do not fall under the purview of the Board, Moorlach chose to paint a large swath by attacking free speech in general and limiting all speakers to three minutes per item and a total of three items per meeting. The defeating vote looked like that was the end of it until a subsequent meeting, where Klubinikin spent a more than an hour, three minutes at a time, to harass the board.
After that meeting, Campbell changed his mind and told Moorlach that he would be inclined to vote with him in abrogating free speech at board of supervisors meetings. On Tuesday, another vote was taken and the rule change, with some modification to make the limit a 9 minute aggregate, passed 4-1 with Supervisor Janet Nguyen the sole dissent.
ACLU attorneys said the decision coming from a body that is supposed to serve the people was dissappointing. And, although Terry Francke, a free speech advocate and attorney said the decision appeared to “comport” with the Brown Act, he did not sound too happy about the decision.
Nguyen’s dissent is unsurprising. As a Vietnamese-American, she understands the chilling effect supressing free speech can have in a democracy. What is surprsing is Supervisor Shawn Nelson, a Republican and near-libertarian, voted with the majority. Given his stated views on the limitation of government and the 2nd Amendment rights of people to bear arms, Nelson, along with Nguyen, should have taken the lead in opposing this measure. His opinion to the contrary would probably have swayed Campbell who has had trouble, throughout his stewardship on the board, making decisions on his own when it comes to issues such as this. And, for once, we agree with Darrell Nolta, a frequent speaker and critic of the OC Board of Supervisors when he asked why Moorlach needed such a draconian approach of suppressing the free speech of everyone to rein in one voice.
So why the limits? Granted, few people want to hear one person continuously drone on about their personal problems every few minutes. And, no one disagrees that the board has better things to do with their time. Klubnikin, unlike Darrell Nolta, spends considerable time spinning each issue he speaks on before the board into his personal saga of troubles with the county and courts. But, rather than use existing rules to further prohibit abuse of his right to speak, the supervisors decided to limit everyone. And, there is little comfort in Moorlach’s assertion that the board would have discretion to allow variance when necessary. If limiting the possibility of lawsuits, as Bill Campbell asserted, is one reason for the rule, then allowing this type of discretion will probably lead to a likelihood of a lawsuit when it is perceived that the board is allowing their cronies and advocates extra time but not those who they perceive as adversarial.
For the time being, it looks as if the Orange County Board of Supervisors will have their way. How long will it be until individual city councils will follow suit? As it stands, few people actually speak before the government councils because they feel their voices are not heard. Folks like Nolta who, while often perceived as gadflys, believe themselves to be acting in a watchdog capacity, may now pay the price for expediency.
We’d like to know what you think of this issue? Should a governmental body, whose purpose it is to listen and serve the public, be allowed to unnecessarily limit the right of the public to address them simply for the sake of expediency?
John Moorlach: Politician, Soothsayer, Storyteller
Courtesy of The Liberal OC
(The story was updated to correct the quote at the end -ed.)
Growing up, my mom always taught me that omission is as bad as commission meaning that, if you fail to say something when you should have, that is just as bad as telling a lie. In Orange County Board of Supervisor John Moorlach’s case, he does not seem to have gotten the same message.
On June 21, 2012, Moorlach took his “message of change” to county employees. In an email sent to all employees entitled, “A new Approach for Labor Negotiations”, he outlined the current financial condition of the county and laid the blame squarely on the backs of the public employees.
This is not an unusual tactic for Moorlach, who still feels that he is the savior of the county after having foretold the coming 1994 bankruptcy. Of course, whenever Republicans like to speak of that, they emphasize the foretold part, as he did absolutely nothing to prevent the bankruptcy. He could have. He could have notified the state of the illegal doings of then county treasurer, Bob Citron. He could have notified the district attorney. Instead, he simply voiced his opinion. And many people agree that, had he not said anything, the crisis would have passed in a week or two and bankruptcy would have been averted. In fact, many say a bankruptcy was not required anyway and that it was engineered by some for personal and political gain. So much for John’s soothsaying. That could be why no one is listening as he screams, “the sky is falling”, again.
But Moorlach, who had already decided to run for office, capitalized for several years on his fortunetelling abilities. When he came to the Board of Supervisors, it seemed as if the other Board members were a bit in awe of him. Like the E.F. Hutton commercials of old, when Moorlach talked, people listened. One of the things Moorlach said from the beginning (and we will hold him to his word) was he would not run for any higher office. We assumed he meant that he was a local politician and not one to go to Sacramento on our dime. We’ll see how that works out now that he is in his final term after his unsuccessful bid to extend Supervisor’s terms to a third limit. Nowadays, we hear the Republican Party locals like what John says more than they like John himself. In any case, his motives on a variety of issues have been called into question on more than one occasion, most notably by one of our newest Supervisors, Shawn Nelson.
Oh, let’s not forget that, when Moorlach left his job as County Treasurer to take the job of Supervisor, he anointed his crony and friend, Chriss Street to take his place. Street, as you know, became mired in scandal of his own when, as trustee of the bankrupt Freuhauf Corporation, he breached his fiduciary duty “in an effort to serve his own selfish ends.” Almost as quickly as he said hello to his buddy, Moorlach was quoted as saying, “He’s got to go. The taxpayers don’t deserve this nonsense.” Apparently, John made a better politician than a friend.
Now, there is no doubt that John hates public employees. He hates their unions and he hates the fact that he cannot just change their compensation whenever he chooses to balance the budget. He has been know to refuse to shake hands with union officials and refers to them as union thugs. He has his hatchetman and chief bootlicker, County CEO Tom Mauck attempt to deal with them. Tom Mauck is a story unto himself but, suffice it to say, he hates public employees as much as John. It was rumored that, at one time, he even said he deserved the compensation he received, including his lucrative pension, car allowance and other personal benefits, because he worked hard and most public employees were slackers.
So, now that nearly every public employee union is in negotiations this year, it comes as no surprise that Moorlach would be pushing his agenda hard. Although his influence is waning with a public who has come to see him as a typical politician, he continues to put out missives like the one he penned Thursday and backs it up with graphs. From his letter:
These negotiations come at a time when our financial resources have experienced several years of contraction and are projected to see minimal, if any, growth in the future. Moreover, we continue to defend against efforts by the State of California to reach for our current assets and future revenue streams. Juxtaposed with our flagging revenues, the total compensation for County employees has steadily risen. The primary drivers of the increasing total compensation are salary growth (for a number of reasons), pension contributions, and health care benefits. The chart below demonstrates the growth in average total compensation for county employees over the last five years.
A New Approach for Labor Negotiations
This year ranks as one of the most important in recent history in Orange County for labor negotiations. Discussions are already underway with several of our largest bargaining units, and by the end of this calendar year, we hope to have new agreements in place for all the major labor groups in the County. These negotiations come at a time when our financial resources have experienced several years of contraction and are projected to see minimal, if any, growth in the future. Moreover, we continue to defend against efforts by the State of California to reach for our current assets and future revenue streams. Juxtaposed with our flagging revenues, the total compensation for County employees has steadily risen. The primary drivers of the increasing total compensation are salary growth (for a number of reasons), pension contributions, and health care benefits. The chart below demonstrates the growth in average total compensation for county employees over the last five years.
In total, the Average Total Compensation across all of the County’s positions has grown by nearly $15,000 over the last four years, equivalent to a raise in total compensation of 17.2%. During this same timeframe, property tax revenue, which represents the overwhelming majority of our General Purpose Revenue, has grown scarcely more than 3%. In order to address the unsustainable trend in total compensation growth, the County is now faced with either laying off employees and reducing services in order to achieve a more tenable financial position, or finding ways to restrict the growth in total compensation in order to bring it in line with the growth in available resources. The Board of Supervisors has decided to pursue the latter approach, in an effort to retain as many employees as possible and maintain service levels to the public we all serve.
In simple terms, this means that the Board is committed to negotiating agreements with all of our major bargaining units in which the costs of employee compensation do not exceed our expected growth in property taxes. Going into fiscal year 2012-13, property tax revenues are expected to remain flat. Consequently, total compensation must remain flat. In order to achieve this goal, some forms of compensation will need to be reduced in order to counterbalance growth in other areas of compensation. These reductions could come in a variety of different forms, such as greater contributions toward pension costs, health insurance modifications, changes in premium pay, and/or salary reductions.
Our financial advisors and staff estimate that property taxes (which account for more than 90% of our General Purpose Revenue) will not make significant gains in the near future. This sobering projection means that absent a paradigm shift in the County’s pension liability (the second most important driver of total compensation after regular salaries) modest reductions in employee compensation will need to continue in the near future if the County is to maintain its goal of financial prudence. These reductions will not need to be at the levels seen in some of our peer counties or at the State (which is looking at a 5% reduction in 2012/13), but will need to be sufficient to offset the anticipated growth in other forms of compensation, like pension contribution and health benefits. The Board of Supervisors will continue to pursue solutions to the ever-escalating pension costs that are crowding out salary increases for our employees, but it is clear that true solutions can only be found with the assistance of our employees and their labor representatives.
It is vital that each County employee know that this new approach to labor negotiations is born out of financial necessity and a commitment to provide the highest level of service possible to the taxpayers who entrust us with their resources. A commitment to the public is something that binds us together as civil servants, and it is what will see us through these times of austerity and sacrifice. Thank you for your continued service and perseverance.
It is interesting that Moorlach now attempts to appeal directly to the employees in the county. It is also interesting, but not surprising, that he does not tell the honest truth, even to those same employees. But, as we said before, he hates public employees and hates the fact that he has to pay them more than minimum wage or any benefits. In other words, he is a typical Republican politician.
One only has to look at the accompanying graph which he points to as proof. Note that total compensation does, indeed, rise 17%. What he doesn’t tell you is why compensation rose at all. In spite of the fact that no line employee has received a raise since 2007, base compensation has gone up. How could that happen, you ask? I will tell you what Moorlach failed to say. Since 2007, managers, executive managers and others above the rank of supervisor (and there are a lot of them) have all received multiple raises. Most of the executive managers receive a car allowance of nearly $800 per month and all managers down to manager I, receive an optional personal benefit of about $4,000 per year which, if they swing it right, comes to them tax-free over and above their salaries. So, if you spread that $9,000 per year out to just the management staff, rather than all employees, how much did their compensation increase? Moreover, the question is, when the county should be in austerity mode, how could anyone receive an increase in salary? Much of it was caused by unjustified promotions and raises in the management ranks.
Let’s talk healthcare. In his letter to the masses, Moorlach talks about how cost have increased. The graph, once again, shows how costs per employee have risen a modest $2400 since 2007. Healthcare costs are one of the single-most expensive benefits of employees. Moorlach makes it sound like the employees are being unreasonable about healthcare. However, the unions and the county have always been willing to sit down and discuss the issues over healthcare cost. A few years ago, OCEA agreed to split the retiree pool. This resulted in higher costs (and a lawsuit) for retirees, while helping to contain costs for active duty employees. Over the years, the unions have agreed to pay a portion of their dependent healthcare and substantially increase co-pays to doctors and for medications. In fact, it has been the unions who have been at the forefront of containing healthcare costs while maintaining an important employee benefit. Still, healthcare costs have increased through no fault of the employee or the county. So, why lay the blame on county employees?
The big elephant, of course, is pensions. And here, Moorlach clearly withholds important details, even from his own employees. For example, he likes to expound upon those unreasonable pensions of public employees. It is true that most non-safety public employees (including managers and executives) negotiated an enhance pension that would allow them to retire with more money at an earlier age. Prior to the enhancement, employees received 1.67%@57. In 2004, unions successfully negotiated a new tier. No one can disagree the resulting pensions would cost both the county and the employee more. What he did not say is that the union agreed employees would pay for both the employee and employer side of the increased costs.
In a recent editorial, OCEA General Manager Nick Berardino stated:
In other words, since OCEA-represented employees agreed to pay the entire cost of improving their retirement benefit – the improvement did not cost the county or its taxpayers anything. Not only that, the employees’ commitment to pay for the new benefit was enforceable into perpetuity. Employees are used to seeing that pension offset being taken from their paychecks regularly.
Then, in 2009, OCEA once again stepped forward, negotiating a one-time option for current employees to elect a hybrid retirement benefit consisting of a 1.62@65 defined benefit formula coupled with a modest defined contribution plan. San Jose’s approach also involves a current employee option component, but OCEA and the county have been attempting to get IRS approval for their plan long before most jurisdictions, including San Jose, even had pension reform on their radar.
Another important piece of the pension shortfall puzzle is the fact that the county, much of it during Moorlach’s term, frequently took “pension holidays” where they did not make any contribution to employee pensions (employees do not have that option). That’s because they did not have to. But, in looking back, don’t you think they should have? Does anyone think that would have made a difference (a show of hands, please). This was clearly shortsighted thinking on the part of the Board. To be clear, the Orange County Retirement System, although below the recommended 80% level due to the depression, is well funded and not in any danger of collapsing.
Oh, did I forget to mention that, until recently, managers, executives and elected officials did not pay into their pensions at all? I guess I am getting like John in my old age.
So, where is it that county employees have not done their part to rein in pension costs and continue to provide quality service to the residents of Orange County? It would seem, with this new information, that Moorlach is only telling the part of the story he wants us all to hear. And, if you thought he did not want you to hear it, this blog is not the only one to mention his letter to the masses.
So, there you have John, the storyteller.
If you look at anyone in this, look at how badly the Board of Supervisors and CEO Tom Mauck have attempted to cover their embarrassing situations and keep their own pensions intact. Oh, did I tell you, John Moorlach, as an elected official and employee of this county, receives the same pension as other employees (we won’t mention that lucrative 457 plan available only to elected officials and managers)? Including his time as Treasurer-tax Collector, Moorlach will have 20 years of service by the time his term ends on the Board of Supervisors. It is interesting to note that he will not even acknowledge this fact. He is one of three members of the Board that gladly keep their pensions intact even while disparaging the good names of union employees. The two that keep a saner head about them are Pat Bates and Shawn Nelson, neither of whom take a pension.
Now you have, as TV commentator Paul Harvey used to say, the rest of the story.
