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.