Lobdell: City on course for financial ruin

I’ve learned the hard way to listen to John Moorlach.

In 1994, when he was running for Orange County treasurer-tax collector, Moorlach walked into my office at the Daily Pilot with a foot-high stack of documents.

“It’s all here,” said Moorlach, then a Costa Mesa CPA who read financial reports as accurately as NFL quarterback Peyton Manning reads defenses. “Orange County will go bankrupt if interest rates move up even a little. Please, please, please, do the story.”

Moorlach handed me what could have been my Pulitzer Prize. And I, editor of the Pilot, let it slip through my hands.

I didn’t understand the complex (and, it turned out, high-risk) investments made by the incumbent treasurer-tax collector, and I lazily bought the political narrative being spun by just about everyone: Moorlach’s wild, the-sky-is-falling accusations were part of his desperate campaign to unseat Orange County’s only elected Democrat.

In the months that followed, Moorlach lost the election, interest rates ticked up, and Orange County filed the largest county bankruptcy in U.S. history. On the day after it was announced, I stopped by Moorlach’s office to apologize.

His voice was hoarse from scores of interviews with the national media, and his eyes red from crying. He looked at me and asked, “Why didn’t you listen, Bill? You at least could have had a Pulitzer.”

Fast forward to today. Moorlach — now a county supervisor — issued this month a DEFCON 1 warning to Costa Mesa that it’s on the precipice of financial ruin. The facts he used to back up his claim were sobering.

The city has plowed through $50 million in savings in three years, it’s reduced capital improvement spending by 80%, it’s eliminated 113 positions (about 18.5% of its staff), and it’s relentlessly hacked away at services. The only place left to cut is staff costs, which account for nearly 90% of the budget.

So what do council members Wendy Leece, Gary Monahan and Katrina Foley do this week? Ignore Moorlach’s unassailable analysis and approve multi-year contracts with the police and city employee unions that extracted the mildest of concessions, leaving Costa Mesa’s annual budget still about $6.5 million in the red. (Mayor Allan Mansoor and Councilman Eric Bever voted against the contracts.)

After the vote, the council trio should have been forced to follow up with a motion to lay off 70 more city employees, roughly the amount of savings needed to erase the $6.5 million shortfall. Where else is the savings going to come from?

It gets worse. Moorlach concludes that Costa Mesa’s budget will have to be slashed another 20% to 30% to keep the city running properly (and those cuts won’t even replenish the $50 million rainy day fund).

Watching Jim Righeimer — a council candidate in the Nov. 3 elections — in recent months, I can’t help thinking he sounds an awful lot like John Moorlach did in 1994 — a lone voice of reason detailing a pending financial disaster unless the course is changed quickly. He has campaigned unflinchingly on the need to bring police and firefighter costs in line with budget realities, and he may be the city’s last fiscal hope for sanity.

For that honesty, he’s taken tons of flak from Costa Mesa police officers, firefighters and their supporters, who have dragged out the anachronistic line that any move to reduce their compensation is an assault on public safety personnel.

Please, that’s so pre-Great Recession.

There’s a new fiscal reality that most of us have force fed through layoffs, cuts in wages and health benefits, unmatched 401(k) contributions, total elimination of pensions and other once-standard perks. These days in the private sector, a reduction in pay can almost be taken as good news — at least the steady paycheck and health benefits are still there.

In the meantime, we’ve made adjustments, eliminating everything from vacations and new cars to magazine subscriptions and cable TV. Credit cards have been run up. Second jobs gotten. Houses foreclosed on. Retirement pushed off.

It’s not fair. It’s not fun. But it is reality.

So it’s unbelievably frustrating for cash-strapped taxpayers to watch politicians — from Washington, D.C., to Costa Mesa — refuse to balance budgets by reining in public employee compensation costs because it might hurt their political futures.

Even locally, the local unions are powerful enough to get two self-proclaimed conservatives — Leece and Monahan — to bend to their will, even as the city drowns in red ink.

It’s not a coincidence that the new union contracts were approved in the final council meeting before Tuesday’s election. Five council candidates are running for two seats. Leece, the incumbent, will likely be reelected, and Righeimer is the heavy favorite to capture the second seat. Union officials didn’t want to risk sitting across the bargaining table from him.

WILLIAM LOBDELL is former editor of the Daily Pilot, former Los Angeles Times religion beat writer and a Costa Mesa resident. His e-mail is [email protected].