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Posted By: on March 18, 2009

Los Angeles Times
January 1, 1995, Sunday, Home Edition

SECTION: Opinion; Part M; Page 1; Column 1; Opinion Desk


BYLINE: By Mike Davis, Mike Davis is the author of City of Quartz: Excavating the Future of Los Angeles (Routledge, Chapman & Hill).


With financial wreckage strewn across 187 different municipalities and school districts, the collapse of Orange County's bond pyramid may prove to be the most socially destabilizing of Southern Califor nia's recent chain of human and natural disasters.

Bankruptcy, of course, is only the visible tip of the crisis. Underlying the financial debacle is a system of government by special interest and political exclusion that minorities have been shouting about for years.

According to Art Montez, state director of urban affairs for the League of United Latin-American Citizens (LULAC), his organization had alerted the county grand jury in early 1993 to sweeping abuses by the board of supervisors, including systematic violations of the Brown Act (prohibiting secret meetings) and the 1965 Voting Rights Act.

LULAC charges that Latinos, Asians and African Americans were routinely excluded from key commissions and judicial appointments, while an "invisible government" of billionaire developers and wealthy Republican contributors enjoyed virtually unlimited behind-the-scenes access to the county executives. They warned that supervisorial power was careening out of control toward some inevitable disaster for the county.

When the grand jury chose to ignore these allegations -- instead launching an inquisition into the "costs of immigration" -- LULAC appealed to the Clinton Administration. The 25-count complaint to the U.S. Commission on Civil Rights, filed in July, 1993, reiterated the charge that supervisors were refusing to appoint Latinos -- a quarter of the population -- to the board of the Orange County Transportation Authority. LULAC also protested the widespread misuse of state and federal funds by municipalities that collected housing subsidies, but refused to spend them, as mandated, on low-cost units. Instead, they imposed housing occupancy limits to restrict growing minority populations.

Although LULAC's complaints did not focus specifically on the county's spiraling bond portfolio or Treasurer Robert L. Citron's penchant for playing Russian roulette with interest rates, Montez insists that "lifting the veil of secrecy from county government, might have exposed the investment practices as well. Perhaps we could have driven the money-changers from the temple before they brought the temple crashing down on ordinary citizens' heads."

In any event, the Clinton Administration has shown little interest in responding to these allegations of civil-rights violations.

The supervisors meanwhile keep up their self-righteous caterwaul that they are victims not instigators. Citron, according to them, was a latter-day Rasputin (and a Democrat to boot) who hypnotized them with his broker-babble about "reverse repurchases" while he was stealing their livelihood.

It has become clear, however, that Citron was merely the technician -- he worked the voodoo that appeased otherwise contradictory fiscal demands from the supervisor's two core constituencies.

On the one hand, the major land developers and theme-park operators -- such as the Irvine Co. and Disney -- are seeking higher levels of public investment to leverage their expansion projects, as well as reduce the freeway gridlock that currently threatens to suffocate all growth in Orange County.

Their regional agenda translates into billions of dollars for an expensive face-lift of the Disneyland periphery as well as additional parking structures for the Magic Kingdom, three tollways, a new stadium for the Angels and Rams and the conversion of the former El Toro Marine Corps Air Station into a second airport.

On the other hand, thousands of wealthy homeowners and GOP contributors -- especially in the suburbs and beachtowns south of the Costa Mesa Freeway -- still have portraits of Howard Jarvis hanging over their mantles. It translates into instant political death to talk about raising taxes to these people.

In the past, some funds for infrastructure expansion have been obtained from Washington, or diverted, as Latino groups have long charged, from set-asides for the poor. But the most effective strategy for increasing capital spending without taxing the rich has been Citron's government by Ponzi scheme. From the late 1980s, he regularly gambled and won as much as $800 million each year for pool participants. Moreover, as recession eroded Orange County property values for the first time in living memory, Citron's earnings from speculative repurchase agreements replaced the otherwise dangerous shortfall in taxes.

Between fiscal 1992 and 1993, for example, the share of income from interest-bearing investments soared from 3% to 35% of the county budget, while the property tax percentage fell from 60% to 25%.

So, for as long as it lasted, Citron's prestidigitation kept all the champagne glasses full: Developers got their bond issues, affluent suburbanites kept their tax breaks, the supervisors waxed in power.

Now, with Orange County at least $2 billion poorer, it might seem time for heads to roll in the Hall of Administration. Unfortunately, the supervisors are operating the guillotine. Having driven the county into bankruptcy, they are now using the crisis as an excuse to ignore environmental regulation and collective bargaining, while simultaneously shifting much of the burden of the cutbacks onto children and the working poor. Take the environment. After 40 years of blitzkrieg suburbanization, only two major natural landscapes -- Bolsa Chica marsh and the San Joaquin Hills -- remain reasonably intact for future generations.

Incredibly, the first response of the Board of Supervisors to the eruption of the bond crisis in early December was to steamroll approval for the Koll Real Estate Group's huge, 3,300-unit development of Bolsa Chica. This was soon followed by the resumption of grading on the controversial San Joaquin Hills Toll Road, where local demonstrators had chained themselves to bulldozers.

At the same time, the board has declared war against the unions -- 70% of its 16,000 workers. Without negotiation, existing labor contracts have been unilaterally abrogated. Department managers have been given unprecedented authority to fire employees or cut pay without regard for seniority. The brunt of the service cuts, meanwhile, will be borne by legal services for the poor, health care and welfare while law enforcement and development services (like land-use planning) have been exempted.

There is, of course, method in this madness. Orange County's Establishment seems to be uniting around a triage that lets the supervisors save their beloved capital programs and the state rescue the schools, while public employees and low-income neighborhoods are allowed to drown in the red ink. Yet this could be only the beginning. Right-wing ideologues -- hallucinating on the thoughts of incoming Speaker of the House Newt Gingrich -- are demanding revolution, not just retrenchment. They see the county's financial crisis as a heaven-sent opportunity to privatize government out of existence and install the entrepreneurial millennium.

The Board of Supervisors has already shown a willingness to meet these demands -- at least part way. Supervisor-elect Marian Bergeson, for instance, has invited the libertarian Reason Institute to advise the board on contracting out major county mandates. Other supervisors are urging a fire sale of public assets, including John Wayne International Airport.

What is the alternative? Montez of LULAC proposes a populist uprising, led by unions and community groups, that focuses wrath on the real culprits. LULAC wants a clean sweep of the Hall of Administration: resignation of the supervisors, an end to government-in-secret, full compliance with the Voting Rights Act, an elected transportation commission, a critical review of all capital programs and a thorough federal probe into the background of the Citron scandal. "Let's begin by admitting the truth: Orange County -- the Republican showcase -- is a disaster area for democracy."*
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