Whether it’s jobs, pensions, medical benefits or government services and contracts, letting go in a special-interest society isn’t easy.
And while next week’s primary election doesn’t feature a packed slate of contested races or ballot initiatives, this year’s election cycle is sure to focus more on finances than personalities.
In Orange County, despite the fact that the $5.6-billion budget being unveiled next month for fiscal year 2012-13 was balanced for the first time in recent memory without major cutbacks, Orange County Supervisor’s Chairman John Moorlach sees tough fiscal times ahead.
And tough decisions for every level of government.
Gov. Jerry Brown has already radically reshaped the face of state government by changing how prisons are structured as well as redevelopment agencies. And come November, he’ll be asking voters to make some decisions with vast consequences in terms of how state government is financed.
In Orange County, Moorlach has been unveiling a troubling analysis based on his tinkering with the annual finance reports filed by many local jurisdictions. By comparing unrestricted assets on a per capita basis, his analysis points like a compass toward trouble for many local cities.
He sees revenues like property and sales tax as flat while costs such as pensions and medical care are rising.
This month, he spent some time with the Voice of OC Community Editorial Board to chat about the nature of the challenge facing local elected officials this year. According to his analysis, Moorlach sees many legacy cities in Orange County like Anaheim and Santa Ana facing financial strains that could be crippling.
The county government, he argues, also sits precariously atop a shaky fiscal foundation because of multiple threats, such as lax property tax revenues; fights with the state over vehicle license fees and with retirees over medical coverage; and potential mounting costs, like Brown’s plan to shift state prisoners to the local level and eliminate redevelopment agencies.
And then there’s the county’s mounting pension liability, which now hovers at $4.4 billion, and the rising annual financing costs facing taxpayers.
Moorlach points to a rising tide of ballot measures adjusting pension benefits in places like San Francisco and San Diego in June as an indicator of what’s ahead. He thinks that Los Angeles is looking at a potential bankruptcy given that the gap between responsibilities and resources is hundreds of millions.
“It will interesting to see what happens with this budget cycle,” he said.
What will be interesting for voters and taxpayers is to see what players — elected officials, labor groups, institutions like public safety — step up to the budget plate with solutions as opposed to rhetoric in this year’s election cycle.
Given the serious nature of the fiscal challenges facing residents, it’s important that progress be achieved.
Yet in an interest-group society like ours, giving up anything isn’t easy. Ask Moorlach how difficult it’s been to persuade small, unincorporated islands like the area known as Roosmoor to agree to annex to nearby cities. So far, he hasn’t been able to budge even one, despite trying since he was first elected in 2006.
Voice of OC Community Editorial Board member Gloria Sefton asked Moorlach about a recent grand jury report calling for the elimination of special districts. While Moorlach agreed with the aim of streamlining government, he recalled how tough it’s been to get areas to agree to annex.
“People like things the way they are,” Moorlach said. “Just raising questions, you’re going to get in trouble.”
“All it takes is leadership, where we going to find that?” he said.
Moorlach agreed that some districts should merge, but given what he’s seen, “good luck trying.”
“We got three cities to come this close to merging their police departments,” Moorlach said, declining to identify them. “Then the chiefs got together and everything crumbled. … It all stopped.”
So when asked where are the big game-changers going to come from in Orange County this year, Moorlach looks to labor.
He acknowledges that the Orange County Employees Association stepped up in a major way several years ago when they agreed to restructure the county’s retiree medical benefits, which saved more than $1 billion and is felt every year by saving county coffers nearly $100 million in annual payments.
He also credits the Association of Orange County Deputy Sheriffs for their decision a few years ago to pay more into their pensions, which are the most lucrative in local government. But given that the county has all it’s major labor contracts reopening this year, he wants them to step up again, especially on pension reform efforts.
“Something has to be done so that employees get a pension but maybe not the pension they get now,” Moorlach said, adding he wants current workers to accept a lower pension benefit. “That’s the game-changer. … That’s what everybody is struggling with,” he said.
At the Voice of OC Community Editorial Board, members from the labor community, who are just beginning negotiations, didn’t have much comment.
Yet what is clear is that getting agreement on any kind of pension plan revisions won’t be easy.
To date, the Orange County Managers Association — the county’s first labor group to start talks — still hasn’t agreed to pay more into their pensions.
And Supervisor Shawn Nelson's plan to get supervisors off their pensions has languished for more than a year, with many, including Moorlach, resisting efforts to unilaterally lower their own benefits.
What is clear is that time is running out for all sides as the economy forces large-scale change. As Moorlach has said, “The wall is coming.”