Bankruptcy? What Bankruptcy?!

OCs financial meltdown, five years later

"The poor and their advocates don't have the clout [in Orange County]," former Supervisor Bill Steiner recently told The Orange County Register. "They never have."

As we celebrate five years of life in bankrupt Orange County, it's important occasionally to recall the words of the late, great editor of Progressive magazine: "Governments lie."

Newspapers, if only occasionally, can tell the truth.

The Coup

There was a moment, just after the bankruptcy, when it seemed things would turn out differently—when there might even have been a revolution in Orange County. A loss of $1.8 billion in taxpayer funds coupled with the rare, nauseating glimpse of politicians at work infuriated tens of thousands of normally apathetic citizens. A government ruled entirely by die-hard conservatives had failed and become the butt of jokes around the world. Contrite local leaders found themselves pleading for—of all things—state assistance from the then-Assembly speaker, Democrat Willie Brown. Two unofficial but powerful troikas—one composed of top developers and another composed of bureaucrats, including then-Sheriff Brad Gates and then-District Attorney Michael Capizzi—proposed increasing the local sales tax, a move voters soundly rejected. To pay off the bankruptcy loss, in 1995, the county borrowed $800 million from Wall Street.

Poll after poll showed citizens countywide overwhelmingly favored drastic, corrective government reform. A daily barrage of hate mail arrived for the supervisors. Several people spoke of lynchings. Supervisor Gaddi Vasquez—the Latino face of the new Republican party—went suddenly silent, ultimately resigned, and disappeared from the harsh glare of formal politics; he now pulls down a six-figure salary as a lobbyist for Edison International. His voluble colleague Tom Riley served out his term with a whimper and died in early 1998 with hosannas from county developers. Roger Stanton, who had been talking about a run for U.S. Congress, left office and has said nothing of that ambition since. Harriett Wieder vanished. The bankruptcy turned Steiner, once the county's most obvious defender of abused and neglected children, into a political eunuch, incapable of pointing out even the most glaring deficiencies in the county's Children and Youth Services agency.

As frightened as the supervisors were of public reaction, their anxiety did not surpass that of the power brokers, influential real-estate developers and lobbyists who, for decades, quietly guided county government behind-the-scenes and directed millions from sweetheart deals into their own pockets—the multibillion-dollar toll roads being the most obvious example. An angry citizenry demanding answers and real change threatened to unravel the staggeringly lucrative and cozy relationship between business and government. The Register reported that developer George Argyros told Irvine Co. developer Gary Hunt: if we don't handle the situation, we're going to suffer.

The power brokers skillfully diverted public outrage away from their own extraordinary influence, defining the terms of reform debate and putting their allies in key government posts. It was a silent coup. The people's revolution never had a chance.

Enter Mittermeier. Of all the high-profile but specious reforms since the debacle, Mittermeier's rise to CEO exemplified how very little really changed in Orange County. As one of its last major acts, the bankruptcy-tarnished Board of Supervisors appointed the standoffish Mittermeier to the CEO job in September 1995. Mittermeier's supporters marketed her as a model of businesslike efficiency, a strong woman for a tough job. Her arrival was heralded as a reform in and of itself.

In fact, during her 21-year career, Mittermeier had already established her bona fides as an insider. Since 1990, she had been trusted to run the government's most lucrative cash cow, John Wayne Airport. At John Wayne Airport, Mittermeier honed the skills that have been so useful to her at the county Hall of Administration: keep cash flowing in and limit public scrutiny of airport finances and operations. Several high-level sources said her appointment to CEO was first privately approved by developers and lobbyists eager to maintain easy access to the county's massive annual budget: $3.8 billion for the 1999-2000 fiscal year.

No one doubts Mittermeier's skills and intelligence, just her loyalties. Despite her talk about openness and honesty in government, Mittermeier remains the friendly—and female—face of corporate lobbyists and developers. That's not how Mittermeier describes it, of course. Shortly after taking office, she told reporters, "A lot of people think we're bottom-dwelling, scum-sucking bureaucrats, feeding at the public trough. I think they are just going to have to watch what happens."

From the moment the bankruptcy was announced, the political machine's goal was to convince the public that they intended to clean up their act. "We're leaving no stone unturned," said then-Supervisor Vasquez. Stanton guaranteed those responsible for the debacle would be brought to justice. Gates boasted, "Government's probably going to be reinvented here."

It did not take long to proclaim victory. Only nine months after the bankruptcy, the Orange County edition of the Los Angeles Times declared the problem fixed: "historic" action by supervisors had "drastically altered the way county government is run."

Then-Supervisor Donald Saltarelli—a former Irvine Co. lobbyist who was appointed by Governor Pete Wilson to replace a resigning Vasquez—didn't hold back his enthusiasm in May 1996. "Orange County is back," he said. "We are vibrant, strong, healthy and doing what needs to be done." In the 1997 State of the County address, then-board chairman Steiner said, "Many lessons have been learned. . . . Local government has been inextricably altered. What emerged is a stronger county where there is more involvement in the political process and more accountability."

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