Is an Elected Treasurer the Best Thing for Orange County?

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Tuesday, April 13, 2010 |It’s election time in Orange County and once again voters are confronted with a treasurer’s race that features high drama, at least a whiff of scandal and a shiver of financial peril.

“Which is why,” said Fred Smoller, director of a public administration master’s degree program at Brandman University at Chapman University in Irvine, “it should be an appointed office.”

An elected county treasurer is a holdover from political planning in the 1700s when the nation’s founders were trying to establish a stable, dependable new system of government.

But stable and dependable have not always been words used to describe the office in charge of Orange County’s $6-billion-plus treasury in recent decades. Words like bankruptcy and fraud have been more apt.

In 1994 Orange County Treasurer Robert Citron, in conjunction with Merrill Lynch, catapulted the county into the worst municipal bankruptcy in U.S. history.

Citron had unsupervised control of county investments and lost $1.6 billion when he guessed wrong and enrolled the county in high-risk bond investments just in time for the 1994 bond market crash.

Ironically, Citron’s 1994 opponent, John Moorlach had warned the public and county leaders that Citron’s investment strategy was dangerous, but was ignored.

After the bankruptcy state law was revised to require minimal qualifications for someone to oversee the county treasuries. Citron was tried and convicted of fraud and in 1995 Moorlach, who is now a county supervisor, was appointed to take over as treasurer.

Moorlach presided over a stable period from 1995 to 2006. But then in 2006, voters, at Moorlach’s urging, chose Chriss Street, his former subordinate.

This year Street was ordered to pay $7 million in a civil fraud case stemming from his handling of the assets of a bankrupt trucking company. He’s also has had his county wages garnished and the board of supervisors stripped him of his power to invest public funds.

The fraud allegations came from his work as a trustee for a bankrupt trucking company before he joined county government. As the court-appointed trustee for the bankrupt Fruehauf Trailer Corp., Street was supposed to liquidate its assets.

Street’s downfall has only bolstered the arguments of Smoller and others who want the position off the ballot. Yet such a change is still not an easy sell.

Orange County voters “haven’t had too much luck” with elected treasurers, noted Bob Stern, president of the Center for Governmental Studies in Los Angeles. “On the one hand, voters don’t want to give up control of who is elected treasurer. On the other hand, they don’t know much about the individual.”

The winner, he said, “often is who has the most name recognition or who spends the most money.”

But Moorlach pointed out that when voters were given the chance in past decades to turn the treasurer into an appointed position, they opted instead to maintain it as an elected office.

Elected officials, he said, can stand up to members of the Board of Supervisors or a county’s chief executive, a role that is critical if the treasurer ever is urged to do something improper.

The down side of that argument, countered Smoller, who unsuccessfully ran for state Assembly in 1990, is those who win elections are politicians and other elected officials are reluctant to step into their territory, even when intervention is warranted.

When the county’s financial situation was unraveling under Citron, he said the board of supervisors backed away, saying “he’s independently elected and we have no control over him.”

And, as Moorlach learned, things can go wrong even when you think you know a candidate well. Like when he supported Street.

Among those jockeying for a chance to succeed Street include his own former subordinate and spokesman, Deputy Treasurer Keith Rodenhuis. Rodenhuis this month successfully defended himself in court against allegations from another contender, Huntington Beach city treasurer Shari Freidenrich, that he lacked the qualifications to legally hold the office.

The other two candidates in the race are Patrick Desmond, who ran in 2006 and is an employee of the county assessor’s office and Dave Lang, a South Orange County Community College District trustee.

So how will voters know if their next treasurer is another John Moorlach or another Chris Street? They won’t, argues Smoller.

“We truly don’t have a watchdog media, we do not have a competitive political system, we do not have an engaged electorate,” he said.

In the June, 2006 election, only 27 percent of Orange County’s registered voters cast ballots, according to the Secretary of State’s office.

Said Moorlach, “At the end of the day, you get the government you deserve, isn’t that the saying?”

Chriss Street’s first name was misspelled in a previous version of this story. We regret the error.

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