MOORLACH UPDATE — Auditor-Controller — March 29, 2012

It’s been a very packed day (and evening).  In the middle of various meetings I received the news that our interim Auditor-Controller decided that retiring was a better alternative to completing David Sundstrom’s term.  This was not good news.  As soon as I arrived back at my office I met with Shaun Skelly personally and asked him to reconsider his decision.  I’m hoping that he does, as he has been David Sundstrom’s understudy for a number of years and his leaving will be a great loss to the county.  (It also wrenches my gut to see qualified executives retire at such a young age, due to the generous pensions provided in the public sector – but that’s a topic for another time.)  My takeaway from today’s events is:  when a thorough recruitment process clearly determines that Shaun Skelly is by far the best candidate, then pull the trigger and close the deal.  Again, I’m hoping he reconsiders.  The Voice of OC provides this late breaking news in the first piece below.

A second piece in the Voice of OC discusses the Board’s decision to continue with our Sacramento lobbying firm.  Although I am disappointed in the VLF flap, which is mentioned at length in the piece, there appears to be no document prepared by County legislative staff over these many years requesting that the VLF legislation be pursued.  I also believe certain business relationships should not necessarily be subject to an automatic request for proposal process.  Consequently, this policy needs a good vetting by the Board at a future meeting.

The final piece is a commentary that is hot off the press from Bloomberg News

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Interim County Auditor Abruptly Quits After Supervisors Delay Giving Him Permanent Job

Shaun Skelly, Orange County’s interim Auditor-Controller Thursday announced his retirement, two days after the county Board of Supervisors delayed his permanent appointment.

A county panel rated Skelly as the top candidate out of 36 candidates interviewed to replace departed Auditor-Controller David Sundstrom On Tuesday, Supervisors’ Chairman John Moorlach asked his colleagues to suspend the search and appoint Skelly.

They balked. And that apparently gave Skelly second thoughts.

“The board had an opportunity on Tuesday and elected not to take it,” said Skelly, who confirmed his retirement after 30 years with the county and acknowledged that the supervisors’ delay gave him pause. “It was a surprise.”

Although he wouldn’t elaborate further on his reasons, the 57-year-old Skelly said quick timing of his retirement is due to a change in rules at the Orange County Employees’ Retirement System that will lower cost-of-living adjustments for retirees who leave government service after April 1.

Skelly, 57, said he is appointing Jan Grimes, who is director of central accounting services for the agency as Interim Auditor-Controller under his authority.

“She’s an outstanding manager and the office will be in great hands,” he said.

He acknowledged that many throughout government are shocked at the decision.

“I have a number of calls to return,” he said.

Moorlach had pushed his colleagues to support Skelly, but supervisors Pat Bates and Janet Nguyen said they wanted to interview him themselves before making a final decision. So the appointment was put off until Apr. 17.

Skelly was appointed Interim Auditor Controller after Sundstrom left the county earlier this year to take a similar post in Sonoma County.

Before leaving, Sundstrom made a controversial tax allocation – opposed by Sacramento – that took $73 million in property taxes from schools and redirected it toward county coffers.

That action came after county supervisors pressed Sundstrom to interpret state law in a manner that effectively thwarted the Brown Administration’s efforts to take away a $48 million set-aside in vehicle license fees for Orange County.

While Sacramento has not yet sued Orange County over the issue, many observers see it as a likely scenario the next Auditor-Controller will have to address.

Also, the next Auditor Controller will have their hands full with a software upgrade to the county’s assessment and property tax system that is years behind schedule and significantly over budget.

— NORBERTO SANTANA, JR.

County to Re-Up With Firm Responsible for $48-Million Oops

Orange County supervisors Tuesday indicated they would renew their annual $264,000 lobbying contract with Sacramento-based Platinum Advisors, despite that doing so violates a county policy that contracts be re-bid after five years.

“I’m comfortable waiving the policy and staying with the current firm,” said Chairman John Moorlach. “Platinum Advisors has been outstanding.”

Waiving the policy made Supervisor Shawn Nelson uncomfortable, and he called it “bad form,” although he said he didn’t have any issues with Platinum.

That drew a response from Supervisor Bill Campbell, who said, “Policies are made for us, and we have the authority to waive them.”

Supervisor Pat Bates also supported a waiver, saying, “This will be a very volatile legislative session.”

Nonetheless, Bates said she wants to see a competition for the lobbying business in 18 months, adding, “Sometimes, competition sharpens the tools in your shed.”

Platinum Advisors got the county contract in 2008 when Republican Party Chairman Scott Baugh was with the Sacramento-based firm. He dropped the county as a client after then-Supervisor Chris Norby complained that the county didn’t get adequate progress reports on what Platinum was doing. While Baugh says he is no longer with the firm, the firm has kept the county contract.

Platinum’s effectiveness got an ugly questioning last year when county officials discovered that $48 million from vehicle license fees had been taken away from Orange County. The county’s entire lobbying team had missed a glitch in a county refinancing effort in 2006 that allowed Sacramento to keep the revenue.

County supervisors had been informed that year that the vehicle license fees were vulnerable and could be lost forever. Campbell was on record as saying the glitch would likely be fixed during the end of a legislative session.

But it never was.

Gov. Jerry Brown’s administration surprised Orange County officials by taking back the vehicle license fees during last year’s budget crisis. The issue remains in limbo, although supervisors temporarily fixed the problem by having County Auditor David Sundstrom shift $73 million in taxes to the county from local schools’ tax allocation.

Platinum Advisors also made news during the proposed sale of Orange County’s fairground when it was revealed that the firm was secretly hired by the Orange County Fair & Event Center board in 2009.

Darius Anderson, who heads Platinum Advisors, came before county supervisors Tuesday and touted his firm as a bipartisan player in Sacramento that has every member of the state Legislature covered by a staffer.

In addition to having a large staff, Anderson said the firm had good access and strong strategic skills.

Anderson, who is known for his longtime sponsorship of trips to Cuba for legislators, told supervisors of his extensive Democratic contacts, noting he was Jerry Brown’s lobbyist when Brown was mayor of Oakland.

He also talked about having a great relationship with state Senate President Pro Tem Darrell Steinberg and Speaker of the Assembly John Perez.

Anderson told supervisors it would be best to bid out the contract for lobbying services toward the end of a legislative session, most likely in the fall. That would allow a new lobbyist, should they win the bid for the contract, to become accustomed to the county’s issues and players.

Supervisors voted unanimously to direct staff to bring back a contract for Platinum Advisors and largely adopted Anderson’s suggestions for how to structure the process for requests for proposals.

Anderson told supervisors his firm would compete effectively because it has developed a specialty with Orange County issues. “We’ve spent a lot of time to build the relationships to understand your issues,” Anderson said.

Anderson acknowledged the firm’s biggest blunder, the loss of the vehicle license fees. But he also credited his firm for scrambling to push a fix through the Legislature before the end of the legislative session. The effort fell short, but, Anderson said, “We made amazing headway in getting it through one body in the Legislature.”

No supervisor publicly mentioned the situation.

Campbell acknowledged after Tuesday’s session that Platinum had dropped the ball in the intervening years regarding the county vehicle license fee situation and said he expressed those sentiments privately to Anderson.

But both Campbell and Nick Berardino, general manager of the Orange County Employees Association who was involved in the lobbying effort, credited the firm for going all out on the last-minute legislative blitz.

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Orange County Dropped Out of Obamacare. Why Haven’t More?

After the U.S. Supreme Court review this week of the federal health-care law, state and local governments might think twice before carrying it out.

The 26 states that brought the suit against the Affordable Care Act were unhappy about some fundamental parts of the law to begin with. A few states have even refused to take money tied to its implementation.

But so far Orange County, California, appears to be the only county government brave enough to express its opposition by refusing funds made available under the law.

Earlier this month, its board of supervisors voted to reject a $40,000 grant to the county’s health-care agency for a workplace-wellness program because the funding was tied to Obamacare. Last June, the same board, which oversees the county’s $5.5 billion annual budget, voted against a grant that would have provided $10 million over five years for health programs, including anti-obesity and anti-smoking efforts.

If the Supreme Court votes to strike down the law, or key provisions of it, state and local governments might incur expenses because federal dollars would no longer be available to finance the programs they approved. Maybe that prospect will encourage other local and state governments to follow Orange County’s lead.

States Take Lead

Michael Tanner, a senior fellow at the Cato Institute, which is on the front lines in fighting the federal health-care law, pointed to the movement on the state level to block Obamacare. “Florida, Wisconsin and Kansas have not only refused to take money but returned money previous governors accepted from Obamacare,” he said, “but this is the first I’ve heard of it on the county level.”

Orange County, which has more than 3 million people, remains one of the most conservative counties in the country and the “last conservative bastion in California,” as described by John Heubusch, executive director of the Ronald Reagan Presidential Foundation. All five members of the elected county board are registered Republicans; even so, the vote on the health grants was split 3-2.

The states’ efforts against Obamacare have drawn all the attention, probably because of the focus on the state-run health-care exchanges outlined in the law. “Saying ‘no’ to a state exchange is absolutely critical to the success” of suits against the law, said Diane Cohen, a senior attorney at the Goldwater Institute, while speaking to lawmakers at a meeting of the American Legislative Exchange Council last year.

Georgia, for example, has not authorized the creation of a health exchange while the Supreme Court considers the law, but as the state’s insurance commissioner said to the New York Times, “Whether the mandate is struck down or not, Georgia is under the edict to establish an exchange.”

The architects of Orange County’s action expressed their frustration in a different way.

In an e-mail, the board of supervisors chairman, John Moorlach, explained his rationale for voting to reject the funds: “How do I, in good conscience, take money from a government that is structurally bankrupt? How do I, also in good conscience, take money from a program that I believe is destined to fail? Socialized medicine will fail, and will fail miserably. When do grant and funding recipients collectively stand up and say, ‘Don’t make us complicit in your poor fiscal management!’”

Brazen Stance

That’s a pretty brazen stance for a local elected official. Even if the supervisors continue to turn down federal funds, on a practical level county residents will still be paying for the program and subsidizing health care elsewhere.

Tanner of the Cato Institute said he doesn’t know if their principled stance really impedes Obamacare, but “it’s important in another way.” When the case against the new health-care law was making its way through the lower courts, the federal government and states were moving ahead with carrying it out. The assumption was that it was “harder for the court to reject something that has already been implemented.”

But, he said, this was not the case. “The fact that they were moving forward with it worked against their legal case,” because some states balked at enforcing the law.

The more states and localities that reject the money, the more support for the case against the law. Conversely, taking the grants makes the case for Obamacare stronger. Accepting the money “should not have a legal impact, but it does,” Tanner said.

Shawn Nelson, the vice chairman of the board of supervisors who voted to reject the grant funding, said that elected officials elsewhere should follow suit.

“Clearly, if everybody would step up to the table and not take money, it would make a huge difference,” he said.

(Brian Calle is a columnist for the Orange County Register and a senior fellow at the Pacific Research Institute. The opinions expressed are his own.)

FIVE-YEAR LOOK BACKS

March 28

2007

Alicia Robinson of the Daily Pilot provided the redevelopment agency update in my District with “Stalled projects move ahead – Improvements for Santa Ana Heights that had long been stagnant finally get the green light.”  Our goal was to get the projects done by the end of 2008.  I could fill a few pages with the unusual and unique snags that we would encounter during this journey.  The Kline Drive saga alone could fill pages.  The bulk of the projects, thank goodness, are done.  We are close to completion, with the utility undergrounding still in progress, but the length of the effort has certainly caused consternation all around.  Here is the article in full:

Orange County supervisors will finish 10 projects in Santa Ana Heights that will cost $23.7 million, they voted Tuesday.

The decision ends years of inactivity on the projects, some of which languished for as long as a decade.

"This is a red-letter day for our community," said Barbara Venezia, who chairs a committee that represents Santa Ana Heights residents.

The Eastern half of Santa Ana Heights is in the city of Newport Beach, and the Western half is seeking annexation. The whole neighborhood is part of a redevelopment zone.

The redevelopment agency’s $40-million fund will pay for the projects, and the rest of the money will go to discharging the agency’s debts and paying a portion of the county’s bankruptcy debt. The 10 projects should be finished by the end of 2008, and the redevelopment agency will be closed in 2016.

A combination of politics and bureaucracy has stalled the Santa Ana Heights improvements for years. But Supervisor John Moorlach, whose district includes Santa Ana Heights, has pushed to get the projects done since taking office in December.

Moorlach and Supervisors Bill Campbell and Pat Bates voted for the project. Supervisor Chris Norby dissented and Supervisor Janet Nguyen — who was sworn in Tuesday — abstained.

Road improvement projects include paving about 650 feet of Kline Drive that is a dirt road, adding two lanes to Irvine Avenue from Mesa Drive to Bristol Street, and other improvements along Bristol Street between Santa Ana and Irvine avenues.

Other projects include replacing playground equipment at Orchard Drive Park, building a park at Mesa Drive and Birch Street, creating three nonpermanent horse-riding rings in right-of-way for the Santa Ana Delhi Channel, and water and sewer system upgrades for the neighborhood.

Some of the work is already underway. Venezia said a project to bury high-voltage utility lines on Cypress Street and Mesa Drive has been going on for a year, and a fire station at Acacia Street and Mesa Drive has been under construction since July.

For Newport, the supervisors’ decision means the city will be reimbursed for some of the fire station costs.

"I think we’re all excited because this really … starts us building those projects and wrapping up the redevelopment agency," Newport Beach Assistant City Manager Dave Kiff said.

March 29

2007

It was a busy news day.  Alicia Robinson, in her weekly “Political Landscape” Daily Pilot column, announced Moorlach to take on annexation issues — The next item on the O.C. supervisor’s checklist is to find common ground with cities regarding unincorporated areas.”  Goals are very important.  It is the foundation for leadership, as they provide clear direction.  We have accomplished some of the goals mentioned below, and we’re still in progress on the remainder.  Now, with clarity on term limits, let’s see if we can move the immovable in the next two and one-half years.

Now that county officials are moving ahead with $23 million in projects to fix up Santa Ana Heights, Orange County Supervisor John Moorlach will have to find another immovable object and get to work on it.

His next job is moving Costa Mesa and Newport Beach to the same page on the annexation of four unincorporated areas the cities have battled over for years — West Santa Ana Heights, Banning Ranch, the Santa Ana Country Club and a neighborhood south of Mesa Drive.

Several previous rounds of negotiations between the two cities, including one with a professional mediator, failed. The cities face a May deadline to bring a solution to the county’s Local Agency Formation Commission, which decides annexations.

Barbara Venezia, chairwoman of a committee that represents Santa Ana Heights residents, has faith in the supervisor. "John Moorlach is a guy who gets things done," she said. He’s committed to getting the Western half of her neighborhood inside city boundaries, Venezia said.

The question is, which city? West Santa Ana Heights residents have unequivocally said they want to become part of Newport Beach, but the area is in Costa Mesa’s sphere of influence — which means it now has the first right to try to annex.

Moorlach said he’s still talking to both cities to work out a solution, and he stopped short of saying where West Santa Ana Heights should go.

"We’re firmly committed to getting it annexed," he said.

Jeff Overley of the OC Register caught up with the topic of the day in “Santa Ana Heights scores windfall — Neighborhood near John Wayne Airport wins conceptual approval from county supervisors for millions in public improvements.”  Here are the opening paragraphs:

Years of clamoring are finally paying dividends for residents of Santa Ana Heights – about $23.6 million in dividends, to be precise.

That’s the amount county supervisors on Tuesday agreed, in concept, to spend for an array of public improvements in the partially unincorporated neighborhood near John Wayne Airport.

The windfall, slated to fund everything from playground equipment to equestrian arenas to power pole removal, was largely orchestrated by Supervisor John Moorlach, active in Santa Ana Heights issues for nearly a year before his election in November.

March 30

2007

An event occurred between my successful election campaign and my swearing in.  It was covered by Rachanee Srisavasdi and Tony Saavedra of the OC Register in “Supervisors will probe killing in jail — Chairman calls the slaying of an inmate tied to child porn a ‘tragedy.’”  I was very impacted by the John Derek Chamberlain death in the Theo Lacy Jail.  It would be the catalyst for providing better reviews of activities in our County’s jails.  The criminal trials for the perpetrators of this heinous crime are still a regular news item in the media as we speak.

Two county supervisors said Thursday they want to review policies that may have contributed to the beating death of an Orange County jail inmate.

The Orange County Register reported Wednesday that senior Deputy Kevin Taylor told investigators he was watching television during the Oct. 5 killing of John Derek Chamberlain, 41, which lasted at least 20 minutes.

An inmate told investigators that Taylor had identified Chamberlain as a child molester, but Taylor’s attorney said that claim has never been corroborated. Six inmates are charged with murder in the case. Taylor remains on duty.

Chamberlain was in jail on a misdemeanor charge of possessing child pornography.

“This is a tragedy. I want to make the jails as safe as possible,” said Chris Norby, chairman of the Board of Supervisors. “Of course, this is the first (killing) in 20 years, but punishment should be administered by a judge or jury, not fellow inmates.”

Norby said he wants the department to consider banning jailers from watching television while on duty. Jailers in Los Angeles and San Bernardino counties are prohibited from watching TV.

“I think guards should be guarding. It should be constant surveillance,” he added.

Supervisor John Moorlach said he is sending his staff to tour Theo Lacy today to investigate the circumstances behind Chamberlain’s death.

“I’m real disturbed, almost emotionally, about what occurred,” he said. “All I can tell you is that I have a long list of questions.”

“We have nothing to hide from them,” said sheriff’s spokesman Ryan Burris.

Disclaimer:  You have been added to my MOORLACH UPDATE communication e-mail tree.  In lieu of a weekly newsletter, you will receive occasional media updates, some with commentary to explain the situation, whenever I appear in the media (unless it is a duplication of a previous story). 

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These pages are for reference, not comment. Thank you.

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