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Archive for the ‘California’ Category

Buy Your Own Assembly License Plate

Posted by Chris Nguyen on May 6, 2013

LicensePlateA72AH/T to my friend Alex Vassar at the One Voter Project for this odd story.  Some of you may recall when OC Political broke the story of the DUI arrest of former 72nd District Assemblyman Richard Robinson (D-Garden Grove).  A key tip in IDing Robinson was his Assembly license plate, which read “A 72 R” on it.  Robinson served in the Assembly from 1974-1986.

Well, now you can your very own “A 72 A” license plate.  The plates belonging to former 72nd District Assemblyman John Quimby (D-San Bernardino), who served from 1962-1974, are now available on eBay.  Quimby died less than five months ago on December 22, 2012, at the age of 77.  His eponymous Quimby Act of 1965 is the law that permits local governments to require developers to donate up to five acres of land for parks per every 1,000 residents expected to move into newly-constructed housing.

The plates are available for $300 until Wednesday, May 22 at 5:06 PM.  Shipping from Yolo County is free though Californians have to pay 7.5% sales tax, which on a $300 product is $22.50.  Click here for a quick look at State Assembly, State Senate, Congressional, and U.S. Senate license plates from the California DMV.

Posted in 72nd Assembly District, California | Tagged: , | 1 Comment »

Do Justice Kennedy’s Prior Rulings Tell Us What He’ll Do in the Prop 8 and DOMA Cases?

Posted by Chris Nguyen on March 26, 2013

I usually loathe reposting old stories from our blog, but in light of the fact that the U.S. Supreme Court is hearing arguments in Hollingsworth v. Perry (Prop 8 case) today and United States v. Windsor (DOMA case) tomorrow, I thought I would repost the story I wrote back on February 8, 2012, after the Ninth Circuit Court of Appeals threw out Prop 8.  (OC Political was a mere nine days old at that point, with our first post going up on January 31, 2012.)  The Supreme Court will likely issue its ruling in June.

Everyone expects Justice Anthony Kennedy to be pivotal in deciding what will happen in these two cases.

Here’s what I wrote on February 8, 2012:

After yesterday’s ruling from the U.S. Ninth Circuit Court of Appeals, Prop 8 supporters jeered, and Prop 8 opponents cheered.  The news showed jubilant same-sex marriage supporters celebrating the ruling and resolute traditional marriage supporters vowing to appeal.

In the May 2009 California Supreme Court ruling in Strauss v. Horton, the result was the opposite, with Prop 8 upheld.  The August 2010 U.S. District Court ruling in Perry v. Schwarzenegger struck down Prop 8.  Yesterday’s ruling by a three-judge panel of the U.S. Ninth Circuit Court of Appeals in Perry v. Brown upheld the District Court.  Prop 8 proponents have 90 days (well, technically, 89 as of this morning) to decide whether to appeal to an 11-judge en banc panel of the U.S. Ninth Circuit Court of Appeals or to appeal directly to the U.S. Supreme Court.

If there’s any lesson to be learned from all the court battles involving Prop 8, it’s that it doesn’t matter what a particular court rules, the side that wins hails the ruling as a historic victory in defense of the legal concepts they support while the side that loses vows to go to another court.  The only way this cycle ends is to take this to the highest court in the land: only the United States Supreme Court can decide this issue once and for all.

In all likelihood, U.S. Supreme Court Justices John Roberts, Antonin Scalia, Clarence Thomas, and Samuel Alito will vote to uphold Prop 8 while Justices Stephen Breyer, Ruth Bader Ginsburg, Sonia Sotomayor, and Elena Kagan will vote to strike down Prop 8.  This means that whether marriage means one man and one woman or whether it means two people of any sex in California and in America rests in the hands of one man: U.S. Supreme Court Justice Anthony Kennedy.

There’s a certain irony that Kennedy will be the key to this issue, since Prop 8 comes from California, and Kennedy is a native Californian who spent the majority of his life in this state and was appointed to the Supreme Court by fellow Californian Ronald Reagan.  A Catholic educated at Stanford University and Harvard Law School, Kennedy was a lawyer in private practice and has been a law professor at McGeorge School of Law during his time as a lawyer and continuing to the present day.

Kennedy’s judicial track record does not make it clear how he’d come down on this issue.

In Beller v. Middendorf (1980), Kennedy (a Ninth Circuit Court of Appeals Judge back then) wrote the decision that upheld the ability of the U.S. Navy to discharge sailors for “engaging in homosexual acts.”  In Hurley v. Irish-American Gay, Lesbian & Bisexual Group of Boston (1995), he joined a unanimous Supreme Court opinion allowing the St. Patrick’s Day Parade to exclude an Irish gay group.

In Romer v. Evans (1996), Kennedy wrote the decision invalidating a Colorado ballot measure prohibiting sexual orientation from becoming a protected class (protected classes include race, religion, etc.).  In Boy Scouts of America v. Dale (2000), Kennedy voted to uphold the right of the Boy Scouts of America as a private organization to exclude gay men from being scoutmasters.

Both sides of the issue can find favorable parts of Lawrence v. Texas (2003), where Kennedy wrote, “the Texas [anti-sodomy] statute furthers no legitimate state interest which can justify its intrusion into the personal and private life of the individual” but also wrote that the case “does not involve whether the government must give formal recognition to any relationship that homosexual persons seek to enter.”  So Lawrence v. Texas tells us that Kennedy opposed attempts to regulate the conduct of consenting adults but also wanted to make clear that the decision did not affect marriage.

In Christian Legal Society v. Martinez (2010), Kennedy joined a court decision that allowed a public school to refuse recognition to a student group that wished to exclude gay members.

Kennedy’s dizzying array of court decisions leaves little clarity as to how he will rule.  However, there is little doubt that the fate of Proposition 8 and of the definition of marriage in California and America rests in the hands of one Californian above all others: Anthony Kennedy.

Of course, we mustn’t forget that Chief Justice John Roberts could somehow determine that traditional marriage, same-sex marriage, all forms of marriage, Prop 8, or DOMA is a tax, and comes up with a ruling that surprises everyone (see excerpt of June 28 post below), but then again there is the marriage penalty:

The second opinion of the day was the one everyone was waiting for: in a 5-4 decision in National Federation of Independent Businesses v. Sebelius, the U.S. Supreme Court upheld the entire health care law officially known as the Affordable Care Act but often called Obamacare.  The individual mandate was held unconstitutional under the Commerce Clause but was upheld under the power to tax.  The shocker: swing voter Anthony Kennedy was in the dissent.  It was conservative Chief Justice John Roberts who not only voted with the four liberal justices but who wrote the opinion.

Posted in California, National | Tagged: , , , , , , , , , , , , , , , , | Leave a Comment »

California’s Two Highest Paid State Employees Fired in Four-Month Span

Posted by Chris Nguyen on March 25, 2013

Making a combined salary of $5 million in 2011, California’s two highest paid state employees were cut from the state payroll in the last four months.

Hired in late 2001, the state’s highest paid state employee made $2.88 million in 2011.  He was fired in November after six years of subpar performance at UC Berkeley.

Hired in early 2003, the state’s second-highest paid state employee made $2.15 million in 2011.  He was fired over the weekend after five years of declining performance at UCLA.

Little surprise, all five of the top five highest-paid state employees (from 2011, the latest year with numbers available) came from the University of California system’s payroll.  With those two gone, the highest earners from 2011 still collecting state salaries are UCLA’s Ronald Busuttil ($1.98 million), UCSF’s Anthony Azakie ($1.81 million), and UCSF’s Philip Leboit ($1.53 million).

tedfordhowlandOh, those two who were fired?  The one fired in November was Jeff Tedford, Head Coach of the Cal Football, and the one fired over the weekend was Ben Howland, Head Coach of the UCLA Men’s Basketball team.

For some of our readers, you saw this a mile away as soon as you read the headline.  For other readers, this raised your hackles at the start of this post and is still an outrage.

Back in July, I had written a post about the massive $169 million subsidies that the UC and CSU systems provide to Division I athletic programs.  This is a net cost that already accounts for all revenues provided by these athletic programs to the universities.

UCLA spent $2.59 million in subsidies to its athletic programs while UC Berkeley spent more than four times as much, with $10.51 million in subsidies to its athletic programs.

As I noted in July:

At a time of budget cuts, tuition increases, class reductions, and enrollment reductions, should UC & CSU really be spending this much money to subsidize athletics?  Aren’t athletic departments supposed to subsidize the universities, not the other way around?

Posted in California | Tagged: , , , , , , , | 1 Comment »

Moorlach: “…OC Political blog announced my intentions…”

Posted by Newsletter Reprint on March 9, 2013

This came over the wire from the office of Supervisor John Moorlach on Tuesday…

MOORLACH UPDATE — Huffington Post — March 5, 2013

Lamar Alexander, when he ran for U.S. President, would frequently say, “Aim for the top, there’s more room there.”  So, that’s what I’m doing.  If you want to get a good sense of the internal debate I’m currently enjoying, then the piece in the Huffington Post below should be of interest.  The writer does an excellent job of laying out the land. 

As you read the piece, let me clarify one thing.  I am not seeking publicity.  I had been keeping my phone calls so confidential, that when the OC Political blog announced my intentions, I had to call an emergency meeting to inform my staff of what I was considering.  And now I have to call friends with an apology that the news leaked before I had a chance to call and discuss the matter with them first.  Should someone else announce their intention to run for Governor, and it makes sense for me to support that person, then I’m out of the hunt.  And then I’ll consider other options.   After you read the piece, know that I am still moving forward with my decision process to aim for the top. Read the rest of this entry »

Posted in 2nd Supervisorial District, California | Tagged: , , | 2 Comments »

Contrary to Popular Belief: Democrats Lack Supermajority in Legislature

Posted by Chris Nguyen on March 7, 2013

As of the November 2012 elections, Democrats had captured 29 of 40 State Senate seats and 55 of 80 State Assembly seats, giving them 2 seats beyond 2/3 in the Senate and 1 seat beyond 2/3 in the Assembly.

However, Democrats have had little chance to actually wield their 2/3 supermajorities because they have been plagued by vacancies.  In the Legislature, a vacancy is effectively a “no” vote, so if Republicans vote against a tax increase, an urgency measure, or any other measure requiring a 2/3 vote, the vacancy joins with Republicans in preventing the measure from reaching 2/3.

On January 2, State Senators Gloria Negrete McLeod (D-Chino) and Juan Vargas (D-San Diego) resigned to become Members of Congress, which shrunk the Democrats’ Senate supermajority to the bare minimum of 27.

Then on February 22, State Senator Michael Rubio (D-Shafter) resigned to take a job with Chevron, which cut the Senate Democrats down to 26 and putting them out of their supermajority.

Next week, the primary elections will take place to replace Senators Negrete McLeod and Vargas.  Assemblywoman Norma Torres (D-Pomona) is the leading contender to replace Negrete McLeod, though she has tough competition from San Bernardino County Auditor-Controller Larry Walker (D-Chino).  Assemblyman Ben Hueso (D-Encinitas) is the leading contender to replace Vargas.

If Torres or Hueso gets over 50% of the vote on Tuesday and resigns Wednesday morning, their seats could be filled as early as May 28 and as late as July 30.  If Torres or Hueso falls short of 50% on Tuesday, the run-off is not until May 14, and assuming they resign May 15, their seats could be filled as early as July 30 and as late as October 15.

The Democrats’ best case scenario has one (but not both) of Torres or Hueso breaking 50% on Tuesday, and the other going to a May 14 run-off.  This would put the Senate Democrats at exactly the magical number of 27  and the Assembly Democrats at exactly their magic number of 54 for a two-month window of mid-March through mid-May for their supermajorities.  If both break 50% on Tuesday or both get forced to a May run-off, Senate Democrats will rise back up to a supermajority with 28, but Assembly Democrats will lose their supermajority, falling back to 53, one short of a supermajority.

The Rubio vacancy can be filled as early as May 21 and as late as July 23.  Since Assemblyman Henry Perea (D-Fresno) has declined to run for the seat, no Assembly Democrat will fill the seat.

This past Tuesday, State Assemblyman Bob Blumenfield (D-Los Angeles) was elected to the LA City Council.  He will take office as a Councilman on July 1.  If he resigns from the Assembly July 1, his seat could be filled as early as September 10 and as late as November 29.

Also on Tuesday, State Senator Curren Price (D-Los Angeles) advanced to a May 14 run-off for LA City Council.  If he wins the run-off, Price will take office as a Councilman on July 1.  If he resigns from the Senate July 1, his seat could be filled as early as September 10 and as late as November 29.  Then, there’s the possibility if an Assemblymember seeks Price’s seat in the special election.

Note that any vacancies that occur in the final year of a term remain vacant under California law, so any Assembly vacancies (and any Senate vacancies in any of the 20 even-numbered districts) that occur after November 30, 2013, will remain vacant until the new term commences after the 2014 general election.

The Democrats’ supermajorities in the Legislature may be quite fleeting.

For Democrats, this will be quite frustrating because vacancies are impeding their ability to use their 2/3 power to implement the policies they’ve dreamed of for years.  For Republicans, this will be quite frustrating because it will be difficult to claim in the 2014 elections that Democrats have overreached and that voters want more Republicans to prevent the overreach; if the Democrats can’t wield 2/3, they can’t overreach.

(The timing on these special elections is that the Governor has two weeks from the vacancy to issue a proclamation for a special election, and the special run-off election must be 126-140 days after the proclamation; the special primary election must be held exactly 8 weeks before the special run-off election; the run-off is canceled if someone breaks 50% in the special primary.)

Posted in California | 2 Comments »

Jim Brulte Elected CRP Chairman

Posted by Chris Nguyen on March 3, 2013

In a surprise to no one, San Bernardino’s Jim Brulte has been elected CRP Chairman.

Here’s his official web site.

Here’s Brulte’s official business biography.

Here’s his Wikipedia biography.

Traditionally, CRP Vice Chairs become Chair.  As Vice Chair Steve Baric of Rancho Santa Margarita stepped aside for Brulte, Brulte proposed appointing Baric as Chairman of the Budget and Expenditures Committee.

Posted in California | Tagged: | 2 Comments »

San Francisco’s Harmeet Dhillon Elected CRP Vice Chair

Posted by Chris Nguyen on March 3, 2013

Harmeet Dhillon of San Francisco was elected State Vice Chair of the California Republican Party.

Here’s her official CRP campaign web site.

Here’s her law fim biography.

Here’s a profile piece on her from the San Francisco Chronicle.

Dillon won 881-227. In other words, she won with a landslide 79.5% of the vote.

Posted in California | Tagged: | 1 Comment »

Live from CRP: Officer Election Results

Posted by Chris Nguyen on March 3, 2013

I’m here at CRP, as are fellow OC Political bloggers Craig Alexander, Scott Carpenter, Chris Emami, Assemblyman Don Wagner, and Allen Wilson.

Tabulation is underway in the CRP Chairmanship election between San Bernardino’s Jim Brulte (who should win handily) and the San Gabriel Valley’s David Miller and in the CRP Vice Chair race between San Francisco’s Harmett Dhillon and Placerville’s Rodney Stanhope.  We’ll have more details on those races shortly.

In the meantime, here are some results:

  • Secretary: Former Orange Countian/Current Humboldt Countian Patricia Welch re-elected
  • Treasurer: Ventura’s Mike Osborn re-elected
  • Vice Chair – Central Coast: Greg Gandrud re-elected
  • Vice Chair – North: Arnold Zeiderman re-elected
  • Vice Chair – Los Angeles: Adam Abrahms re-elected
  • Vice Chair – Central Valley: Fresno’s Marcelino Valdez, Jr. defeated Sacramento’s Ruth Crone in a hotly-contested race.
  • Vice Chair – Northwest: Alyssa Watley
  • Vice Chair – Bay Area: Kevin Crick defeated Rohit Joy in a hotly-contested race.
  • County Chairmen’s Association President: Yolo County’s Mark Pruner re-elected

Update (11:50 AM):  RNC Committeeman and former CRP Chairman Shawn Steel advocates switching from semiannual conventions to biennial conventions to permit greater attendance (since the costs for delegates to travel will reduce from once every six months to once every two years).

Steel advocates switching from the present system of delegates being appointed by party nominees and party leaders to a system where delegates are elected by local Republicans.  He notes California has 1,500 delegates while Virginia has 15,000 delegates attending biennial VRP conventions.

Steel states people have expressed concern that it’d be difficult to control the party if delegates were elected locally instead of being appointed by party nominees and party leaders.  Steel notes isn’t that the point?  He argues the party should be controlled by locals in a bottom-up approach not controlled by party nominees/leadership in a top-down approach.

Posted in California | 3 Comments »

The Munger Games: Bob Huff and Connie Conway – No Criticism of Munger For You!

Posted by OC Insider on February 28, 2013

This weekend, delegates to the California Republican Party Convention will travel to Sacramento will vote on a new Chairman, Vice Chairman and several other important CRP board positions. Since the current Chairman, Tom Del Beccaro, has announced he will not be running for re-election, former legislator Jim Brulte has stepped up to take the Chairman position in what can easily be described as the CRP’s lowest point in a generation. Senator Brulte has only drawn the token opposition of a very late entrant into that race and it appears Mr. Brulte has all but locked up the position. We wish him well in what will be a difficult job.

The real drama is surrounding the continued and expanding influence of Silicon Valley billionaire and Santa Clara County Republican Central Committee Chairman Charles Munger, Jr. As readers of this blog post know, Mr. Munger spent millions of dollars in last year’s election. Some of it was to support Proposition 32 and oppose Proposition 30. Unfortunately Prop. 32 failed and Prop. 30 passed.

Also unfortunately, Mr. Munger attempted to oust Assemblyman Allan Mansoor by spending hundreds of thousands of dollars in support of Allan’s June 2012 Republican opponent Leslie Daigle of Newport Beach. Thankfully that effort failed but Mr. Munger continued forward by spending more hundreds of thousands of dollars in the fall campaign in Republican v. Republican races. It is too bad he could not have spent even a little of that money to help Republicans in Republican v. Democrat races so that the State Senate and Assembly might not be in the complete control of Democrats for the next legislative session. The Chris Norby Assembly race comes to mind.

Recently, State Senate Republican leader Bob Huff and Assembly Republican leader Connie Conway sent out a letter / e-mail to CRP Delegates defending Charles Munger and criticizing those who criticize Mr. Munger. It is noted that during the run up to the race between Allan Mansoor and Mr. Daigle, Mr. Huff and Ms. Conway did little or nothing to help Allan beat off this obvious challenge to a sitting Assemblyman that could have resulted in a Democrat running in the fall runoff against a non-incumbent weaker Republican Daigle for that seat. A pause here to give mega kudos to Orange County OC GOP Chairman Scott Baugh (and hundreds of volunteers) who pulled out all stops in support of Assemblyman Mansoor!

A web site/blog called The Munger Games, which appears to be one of the objects of Mr. Huff’s and Ms. Conway’s wrath, responded to their letter by pointing out they’re defending a man who wasted resources attacking a sitting Assemblyman while being a sitting Chairman of another county’s Republican Central Committee. The blog also pointed out that debates and criticism are important to the political process and the voters of Allan Mansoor’s district certainly expressed their views by reelecting Allan by such a wide margin that Ms. Daigle did not even make it into the “top two” runoff – the new system brought to you by Proposition 14 – again courtesy of Charles Munger, a very big supporter financially of Prop. 14.

Bottom line: The Munger Games blog site asks some very, very important and legitimate questions Senate Republican leader Bob Huff and Assembly Republican leader Connie Conway should answer. Whether or not they agreed with Mr. Munger’s attempt to unseat a sitting Assemblyman at the risk of placing that safe Republican seat in play for the Democrats? If the resources Allan had to raise to fend off that challenge and the resources Mr. Munger used for that race and the R v. R races he spent money on in the fall could have been better spent holding onto Republican seats? Where were they during that June primary battle while Allan was fighting for his political life? Why are you attacking those who are asking these important questions? Why are you attacking those who engage in an honest debate by bringing up these issues?

This blog post writer would like to know the answers to those questions too. Senator Huff what is your response to those questions? Assemblywoman Conway?

Posted in 29th Senate District, 65th Assembly District, 74th Assembly District, California, State Assembly, State Senate | Tagged: , , , , , , , , | 2 Comments »

Moorlach Update – Governor

Posted by Newsletter Reprint on February 26, 2013

This commentary on the Governor’s race came over the wire over the weekend from Supervisor John Moorlach, who reprinted the NBC News reprint of the OC Register story, which credited OC Political for writing about ”speculation that Moorlach was looking at a run for governor” in 2014…

MOORLACH UPDATE — Governor — February 23, 2013

After my wife and I had our first child thirty years ago, the question we would hear most often was “are you going to have another?”  With term limits, it’s déjà vu all over again, with the question now being, “what are you doing next?”  I just did not have an answer.  Serving a third term made the most sense, but that was blocked by three of my colleagues.  So, following the exhortation of Jim Collins in his book Built to Last:  Successful Habits of Visionary Companies (with thanks to John Pearson’s book Mastering the Management Buckets), I decided to consider a small twist on the pursuing of a BHAG (Big Hairy Audacious Goal).

At the age of 57 I have accomplished a series of large goals.  I have enjoyed the private sector for more than eighteen years and served as a managing partner of a wonderful Certified Public Accounting firm office for ten of those years.  I served as an elected County Treasurer-Tax Collector for twelve years, turning around a department that had been an international embarrassment.  I am now concluding eight years as a County Supervisor, which provides an incredible breadth of exposure to services provided by the state and Federal governments to the local level.  In between, I have visited all 58 counties of the state of California with my wife and three children, photographing nearly all of the 1,100 California State Historical Landmarks.  I have hiked to the peaks of every mountain range you can see here in the immediate area and traversed throughout the Sierras, including summiting Mt. Whitney a couple of times.  I served on the California Sesquicentennial efforts with Huell Howser and other wonderful historians, finding myself again traveling all around the state (on my own dime) in this attempt to commemorate California’s 150th anniversary as a state.  Most importantly, I have a story.  My political career started because I stepped into the forum to decry the irresponsible investing practices of Robert L. Citron with taxpayer dollars.  The rest is history and is well documented in a long list of books and publications, including my LOOK BACKS.  Having been through a Chapter 9 bankruptcy turnaround, I know the drill.  I have been publicly outspoken on municipal fiscal and investment management for some twenty years or more.  As you can see from the last LOOK BACK below, I have been addressing the public employee defined benefit pension plan crisis for more than ten years!  I love California, I love it’s history, and I would love to participate in turning its dismal financial condition around.

With this collective forty years of post-high school experiences, and the encouragement from many friends and supporters, the idea of considering a Big Hairy Audacious Goal is in front of me.  It’s fun to ponder an idea that was never on my radar screen when my journey began.  With that, NBCNews.com picked up the OC Register’s electronic article on my current decision process.  I’m just laying things out for you as it relates to this very recent consideration of a Big Hairy Audacious Goal.  I’m not campaigning or asking you to do anything at this time.  Just know that I am on a listening tour on what may be my Plan A, Plan B, Plan C, or Plan D.  Proverbs 11:14 states that “in the multitude of counselors there is safety.”  Accordingly, I’m calling as many individuals as time permits to ask for their counsel.   It is nice to have options.  It is great to have friends.  It is amazingly wonderful to have a supportive wife and three great adult children (and son-in-law).  Having a new granddaughter certainly provides the necessary perspective on life in general.  My family has allowed me to risk and sacrifice in the past and they continue to allow me to dream big dreams.  And for that I will be eternally grateful.  In the meantime, I am fully focused on my current position, which commands more than 100 percent of my attention.

Santa Ana, CA on

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Supervisor Moorlach exploring run for governor

The Republican says he’s ‘calling some key people’ and having fun, but is ‘very realistic’ about his chances.

By ANDREW GALVIN

County Supervisor John Moorlach confirmed this week that he considering a run for governor in 2014.

Moorlach, a Republican who was the county’s elected treasurer-tax collector for 12 years before winning election to the Board of Supervisors in 2006, stressed he hasn’t decided whether to run for governor but has been “calling some key people here and in Sacramento” and so far, “no one’s telling me ‘no.’”

Moorlach will be termed out from his Board of Supervisors seat next year. Last year,Moorlach failed to persuade his board colleagues to seek voter approval of a measure that would have extended the term limit for supervisors from two consecutive four-year terms to three. Moorlach had hoped to run for a third term in 2014, saying the complexity of the job made experience valuable.

With that possibility gone, Moorlach said he gets a lot of people asking “What are you doing next?” Some suggested he run for governor, which he said he laughed off at first. But after hearing it for “the umpteenth time, and it’s getting past joking, then why don’t you go ahead and look at it?” he said Thursday.

“I’m just exploring and listening and asking questions and actually having a lot of fun,” he said.

Moorlach describes himself as “very realistic” about the chances of any Republican candidate in a state where Democrats hold a big advantage in voter registrations.

“We all know if (Gov.) Jerry Brown re-runs it’s going to be a very difficult thing to do,” he said. “But it seems Jerry would be fun to debate in that case in the fall of 2014.”

Tim Donnelly, a Republican assemblyman from San Bernardino County, also has said he’s exploring a run for governor. Moorlach met briefly with Donnelly during a recent working visit to Sacramento and shared that he, too, is considering a run.

In November, after Donnelly said he was forming an exploratory committee to run for governor, the Lincoln Club of Orange County, an influential Republican group, issued a statement denouncing Donnelly’s views on immigration. Donnelly, a former Minuteman Project leader with Tea Party ties, tried unsuccessfully to qualify a ballot measure to repeal the California Dream Act, which allows undocumented immigrants to get state-funded college aid.

“We cannot support Republicans who continually target immigrants, who are members of our community, as scapegoats for their own political advantage,” said the statement by Robert Loewen, the Lincoln Club’s president.

Moorlach, who emigrated as a child with his parents from the Netherlands to Orange County, said it’s not time yet to discuss his views on issues such as immigration, as that would imply he’s made up his mind to run. However, he said, “I prefer some of the proposals that have been proffered by the Lincoln Club and Sen. Marco Rubio.”

Last year, the Lincoln Club adopted a policy statement on immigration reform that would allow undocumented immigrants to transition to guest-worker status and a pathway to legal residency, not citizenship.

Moorlach said it will be a month or two before he makes up his mind whether to run for governor. If he does decide to go for it, the next step would be to form a campaign committee and “try to raise some significant dollars.”

The blog OC Political earlier this week reported on speculation that Moorlach was looking at a run for governor.

Separately, the Board of Supervisors has narrowed its search for a new county executive officer. The CEO is the highest non-elected post in county government, overseeing 17,000 employees.

After Voice of OC reported this week, citing unidentified sources, that the supervisors were in negotiations with Santa Barbara County CEO Chandra Waller for the job, Waller notified her bosses on Santa Barbara’s Board of Supervisors that she was indeed in discussions with Orange County.

Orange County’s last CEO, Tom Mauk, resigned in August over his handling of sexual-abuse allegations against former OC Public Works executive Carlos Bustamante.

Bustamante has pleaded not guilty to 12 felony counts. A preliminary hearing in his case is scheduled for April.

Contact the writer: agalvin@ocregister.com

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County Supervisor John Moorlach, pictured here in a January meeting, says he is considering seeking the Republican nomination for governor in 2014.

PAUL BERSEBACH, ORANGE COUNTY REGISTER

FIVE-YEAR LOOK BACKS

February 21

2008

Less than a month after being reassured by PFM Asset Management of San Francisco that the Treasurer’s investment portfolio was fine (see MOORLACH UPDATE — OC Register — January 29, 2013), and that my concerns may have been unwarranted, contradictory news is received.  Christian Berthelsen of the LA Times covers it in O.C. investments lose market value as fund nears default – The investment in England-based Whistlejacket is a small portion of Orange County’s overall portfolio, but the once-bankrupt county remains gun-shy about financial risk.”  For more than thirteen years Merrill Lynch was the broker dealer scorned by the County.  Add to the list one Standard Chartered Plc. of London, England, for fiscal imprudence and inflicting losses based on greed and unprofessionalism.  Five years later and I still have a visceral reaction when I hear the name of Standard Chartered.

Orange County’s latest investments in complex financial deals took a turn for the worse Wednesday when a fund in which the county placed $80 million neared default after a major U.K. bank aborted plans for a bailout.

County officials said they expect the fund to miss a principal and interest payment to another investor today.

That, in turn, would drive down the market value of Orange County’s holdings.

County treasury officials said they were in the process of writing down the value of the holdings but did not yet know by how much.

Still, they said they would hang onto the notes in the belief they will ultimately recover the county’s investment in full, rather than lose money in a fire sale.

The fund, a $7.15-billion structured investment vehicle named Whistlejacket and backed by London-based Standard Chartered Plc., was forced into receivership last week and had its credit rating slashed.

The O.C. treasurer’s office sent a memo to county officials Wednesday assuring them it would be able to meet the near-term cash needs of investors in the county portfolio, noting the troubled investments are held in a longer-term fund.

The treasury invests the cash balances of the county and many local school districts.

The investment in Whistlejacket is a small portion of Orange County’s overall $7-billion portfolio. But the county is still feeling the effects of its 1994 bankruptcy and remains gun-shy about financial risk.

The county has invested nearly $850 million in structured investment vehicles, or 14% of its portfolio.

Officials have been nervously watching since Treasurer Chriss Street disclosed in December that $460 million of the county’s holdings in such investments faced a potential credit rating downgrade.

In December, as concern grew about the structured investment vehicles and Street fought off an effort to strip him of investment powers, the treasurer assured board members and the public that the county’s SIV holdings were “safe, strong and sturdy.”

Asked if he stood by those comments Wednesday, Street said: “I made those comments based on the information available at the time.

“The markets are very fluid and there is unprecedented turmoil in the credit markets.”

Standard Chartered said Whistlejacket’s finances had been hurt by the tightening credit markets, limiting its ability to issue short-term debt. In a Jan. 31 statement, the bank said it was working on a cash infusion to shore up Whistlejacket’s liquidity, but last week it was forced into receivership as the market value of the fund’s assets continued to decline.

On Wednesday the bank issued another statement saying it was “disappointed” that it was unable to complete a bailout, citing the difficulty of doing so under receivership.

Deloitte & Touche, the consulting and accounting giant appointed to oversee Whistlejacket’s receivership, told investors earlier this week that it would temporarily suspend interest and principal payments while it sorts out the fund’s finances. Whistlejacket failed to make a payment due Feb. 15. It will fall into default today if it does not make the payment.

Street said he was surprised by Standard’s decision to abandon the bailout effort, because other banks have stepped in to shore up their SIVs, and he said that as recently as Monday he was told the rescue was in the works. He stood by the decision to hold the investments and said he is seeking a seat on Whistlejacket’s creditors’ committee.

“Quite frankly, I’m starting to feel that Standard Chartered actively misled investors,” he said.

None of the county’s other SIV holdings have been downgraded. One, in which the county invested $50 million, is scheduled to come to maturity today, and officials said they expect to receive the payment with no problems.

Orange County purchased two medium-term notes in Whistlejacket in January and July 2007 totaling $80 million, both of which mature in January 2009. The county has received $2.2 million in interest payments thus far, and was scheduled to receive another $3.3 million in interest payments beginning in April.

Supervisor John Moorlach, the former county treasurer who is now chairman of the Orange County Board of Supervisors, said there was little the county could do at the moment other than monitor the situation. “All we can do at this point is wait for further updates,” he said. “I’m certainly not inclined to sell it at a major discount.”

Brianna Bailey of the Daily Pilot provided the details of one action I was taking to address the Standard Chartered crisis.  It was mentioned in her “The Political Landscape” column,“O.C. reaches out to U.K.”  Regretfully, our friends on the other side of the pond were unable to provide much assistance.  They did assist in a telephone conference with Chartered Standard, where they clearly stated they were happy to have the OC take the loss as they were not interested in taking it themselves.

The troubled state of one of the county’s investments prompted Orange County Board of Supervisors Chairman John Moorlach to contact the British Consulate after he met Prince Andrew last week at a local luncheon.

Orange County has $80 million invested in the United Kingdom Channel Islands-based Whistlejacket Capital Ltd.

Whistlejacket is a structured investment vehicle that could default this week after the fund failed to repay maturing debt, according to Standard & Poor’s. The fund’s U.K. roots prompted Moorlach to call his new British friends this week and ask, “Hey, can you help us out,” he said.

Moorlach is unsure what the consulate could do, but he said it couldn’t hurt to ask.

“This could become an international concern,” Moorlach said.

The chairman met Prince Andrew when the two were seated together during a luncheon at the Orange County Hilton last week. The prince visited Costa Mesa to strengthen business ties between the U.K. and Orange County.

Structured investment vehicles are used to purchase assets through short-term borrowing. Whistlejacket would be the sixth SIV to fail to repay its debt in recent months, according to Bloomberg Business News.

Moorlach said Wednesday the fund’s underlying assets had deteriorated to such a level the county would probably try to salvage as much as it could of its principal investment.

“Getting anything less than 100% back is probably going to have an impact in the county,” he said.

Ron Campbell of the OC Register covered the story in “Company in which O.C. has invested $80 million faces default – Treasurer says county should recover full investment in British company.”  Here are the closing paragraphs:

Orange County owns two Whistlejacket SIVs, a $30 million issue purchased in January 2007, and maturing on Jan. 25, 2009, and a $50 million issue purchased last July and maturing on Jan. 26, 2009.

Supervisor John Moorlach, Street’s predecessor as treasurer and now his leading critic, said he was anxious about Whistlejacket.

“Now the question is, if we hold on until January are we going to get 100 percent of our principal? 99 (percent)? 95 (percent)?” Moorlach asked.

SIVs hold baskets of assets such as mortgages, credit card debts and student loans.

Institutional investors such as Orange County provide capital to buy assets. They are promised their money back with interest in two to three years and are supposed to be paid back before anyone else.

SIVs typically leverage their initial assets by several times to buy more assets. They finance this with a series of two- to three-month loans.

But the worldwide credit crunch, which began last summer with the collapse of the Orange County subprime lending industry, has nearly dried up the loan market for SIVs.

The county began investing in SIVs at least seven years ago underthen-Treasurer Moorlach. Street nearly tripled the county’s SIV portfolio after taking office in December 2006.

Currently the county holds $837 million in SIVs. Together they comprise about 14 percent of the county’s $6 billion investment pool.

One $50 million issue by Sigma Finance matures Thursday. Street said he expects Sigma to pay in full on time. About half the remaining SIVs mature later this year and the rest in stages through September 2009.

Daily Pilot “The Bell Curve” columnist Joseph N. Bell, promoted my upcoming speaking event with the Airport Working Group (AWG), with his piece “Time to speak up about JWA.” I am providing his column in full.  As a gentle reminder, the JWA “improvements” were a remodeling, not an expansion, to handle the current capacity that had been agreed to.   I have enjoyed my collaboration with AWG over these past six years and aim to continue our great working relationship.

 

Two weeks ago, Newport Beach Mayor Ed Selich told a Speak-Up Newport audience about the goals he sees as priorities in his new job as the city’s chief executive.

The following week, Newport Beach City Manager Homer Bludau sent a newsletter to all local citizens describing the projects that will receive the attention of city officials in the immediate months ahead.

These two events had one striking element in common.

Neither stressed the urgent need by the city and its residents to address the actions, already underway, that set the stage for expanding John Wayne Airport.

This is rather like the city officials of New Orleans debating which streets to repair while a hurricane is just offshore.

If you think this parallel is excessive, come and sit in my patio some morning and late afternoon.

Then multiply what you hear by the number of new gates and added passengers already agreed on under the current caps. Then introduce the “x” factor, the pressure that is certain to be brought to bear to trash the caps on flights and passengers that will expire in 2015.

If you’re one of the people under the JWA flight pattern who is tearing down an old home to build a new one or adding new rooms to old ones or just sitting on a patio like mine trying to talk and be heard over the roar of engines, you should be very uneasy. New and drastic threats to the magnificently evolved atmosphere in which we live are underway right now with little or no awareness among those of us who will be most affected.

For example, under the Airport Improvement Program, almost $600 million will be spent to expand John Wayne Airport. This expansion — which is euphemistically called “improvement” — will include a new multi-level terminal of 250,000 square feet, six new bridged aircraft gates and two new parking structures with some 3,500 spaces.

Design work for the new terminal and parking structures is already underway, along with preliminary construction work. Completion is estimated for 2011, four years before the current cap on JWA flights expires.

These numbers are signposts that point directly to the eventual downgrading of our neighborhoods, our Back Bay and beaches, and our quality of life. They need to be recognized and dealt with now. That can only happen with a sense of urgency that requires holding the line at JWA to dominate any set of goals for this community.

Such urgency is hard to find in Newport-Mesa these days. True, the Airport Working Group is fighting the good fight, as it has for several decades.

The members of Air Fare have planted their flag on no further concessions. The City Council calls it a priority to “minimize the adverse impacts of John Wayne Airport through the implementation of the city’s airport policy.”

But all of this has an air of business as usual, the sort of attitude that allowed the commercial airport at El Toro to slip away from us. Joint meetings are held on a quarterly basis. Meetings of corridor cities take place every other month to “explore mechanisms for formalizing the coalition.”

Consultants with “technical expertise” are sought. Partnership with Costa Mesa is exploring transportation to other airports. Business as usual.

I asked Selich why limiting airport expansion didn’t dominate the list of goals in his speech, and he said he could hardly cover it all in a 15-minute speech and so he chose to “focus on development issues” with the implied understanding from his audience that there was, indeed, an unspoken sense of urgency about JWA.

“We’ve got a cap right now,” he said. “We’ve got to build on that. It’s too early to start negotiating a new settlement.”

It isn’t too early. It may even be too late. Go take a look at the construction sites for the new and better JWA.

It’s time for the residents of this community who have their quality of life on the line to get involved. To impress on the business as usual proponents — from the county supervisors on down to local officials and including this newspaper — that the time has come to rev it up several notches. To put to use some of the muscle that comes with public outrage. And, for starters, to attend the Feb. 26 annual meeting of the Airport Working Group.

Orange County Supervisor John Moorlach will be the featured speaker at that meeting. He’ll provide plenty of ammunition for marching orders to those who attend.

His intent, as well as that of the AWG, is to put the information out straight and clear. The rest is up to us to flex the muscle. Our greatest enemy is complacency, which had a lot to do with getting us into this fix.

The people who would destroy our environment by nibbling us to death with gradually increasing caps won’t negotiate with us unless we keep their feet to the fire. So let’s do it. And for starters, don’t forget that AWG meeting from 6 to 8 p.m. Feb. 26 at the Balboa Yacht Club, 1801 Bayside Drive, Newport Beach.

February 22

2008

The first domino was about to fall and J. M. Brown and Sarah Rohrs of the San Jose Mercury News provided the news in “Vallejo bankruptcy could have far-reaching impact.” Because it portended what would eventually occur, I’m providing the piece in full.

If Vallejo becomes one of the first California cities to file for bankruptcy, the negative effects could be far-reaching, but also may leave the city with a fresh start, experts said Thursday.

If it takes this route, Vallejo would still need to keep its doors open and provide municipal services, though employees may be asked to stay home if there’s nothing in the coffers to pay them.

“The city would still be there and would still have to provide services for residents. With the city you can’t just disappear,” said Orange County Supervisor John M.W. Moorlach, an expert on bankruptcy since his own county took this route in 1994.

Through Chapter 9 protection, a federal bankruptcy judge would sort through the city’s finances, labor and other contracts, and then work out a fiscal plan to move forward.

The situation is different than that of the Vallejo City Unified School District which plunged into a deep fiscal hole in 2004, and secured a $60 million state bail-out loan.

City officials have warned that declaring bankruptcy will not print money, or generate any revenues.

Vallejo’s potential bankruptcy would not be California’s first municipality filing for Chapter 9 bankruptcy.

Orange County filed for bankruptcy in 1994 after a series of bad investments. And Desert Hot Springs, a town of 20,000, sought Chapter 9 protection several years ago after a crushing court judgment on an environmental matter, said Marc Levinson, Vallejo’s bankruptcy attorney.

Experts say Vallejo’s case undoubtedly will raise speculation about municipal bonds that cities use to fund facility improvements and other activities because the once-certain guarantee of profitability will suddenly look poisonous to investors.

Bankruptcy is certain to spark fresh debate about the cost of unfunded employee benefits, and the impacts on bond holders.

As of December, the city had accrued a $135 million liability for the present value of retiree benefits earned by active and retired employees earned. Further, there is a $6 million added cost as current employees continue to vest and earn future benefits, the city said.

“If bond holders are hurt by a bankruptcy, then future lenders will probably put constraints on elected officials’ ability to make promises while in office that must be paid after they leave,” said CPA Marcia Fritz, vice president and treasurer for California Foundation for Fiscal Responsibility, which advocates for pension reform.

“It’s almost a relief that it’s finally coming to this in Vallejo because it will be an example of what happens when you’ve got a lot of people with their fingers in the cookie jar,” she said. “I saw this coming years ago.”

While some experts argue that bankruptcy can leave a city in better financial shape, others argue that it will hurt Vallejo’s future credit rating and place the city’s future in the hands of a federal bankruptcy judge.

The Vallejo school district is nervously keeping an eye on the city’s fiscal emergency. District spokesman Jason Hodge said the crisis might cause the city to withdraw funding for campus police officers, and after-school programs.

The Chapter 9 process, which Vallejo has budgeted $1 million to pursue, could last for years until repayment plans are OK’d.

Experts agree one thing is certain. If the city cannot pay its employees because the general fund is dry — which is predicted to happen by April — City Manager Joe Tanner must instruct all employees to stay home.

“They can’t come to work,” said Levinson, Vallejo’s bankruptcy attorney. “You can’t ask for credit or to extend your credit if you know you can’t repay the debt. It’s not only common sense, it’s the law.”

Alan Davis, attorney for the police and fire unions whose leaders are negotiating with the city to erase an immediate $10 million shortfall, declined comment. The unions represent employees whose salaries total 80 percent of Vallejo’s general fund.

The unions argue they have deferred salary increases and benefits for years while the city has failed to raise enough money to pay them.

For nearly two years, city and union officials have been haggling behind closed doors — then in arbitration — over cuts in salary and disputed staffing levels.

Nearly two-dozen police and firefighters retired last week or are expected to retire in coming days at a cost of at least $4 million in accrued sick and vacation time. The city is locked into contracts with the unions for two more years.

“Once granted, collectively bargained retirement promises can’t be reversed, no matter how outrageous, and no matter how much citizens scream when they find out,” Fritz said. “Bankruptcy may be the only way for Vallejo to legally break these promises and get control of its finances.”

City bankruptcy attorney Levinson said he would rather see Vallejo reach compromises with the unions than file bankruptcy. That’s a decision the City Council could consider Tuesday when it weighs an emergency fiscal plan calling for citywide layoffs.

Interim Fire Chief Russ Sherman agrees, saying, “It’s a nightmare situation — something that everyone has worked long and hard to try to prevent. I’m still holding out optimism that we can get to some sort of agreement to avoid bankruptcy because there would be no winners.”

But Arthur J. Spector, the former chief bankruptcy judge of the U.S. District Court, Eastern District of Michigan, said bankruptcy may indeed make winners out of those who seek it.

In an interview Thursday, Spector, now a bankruptcy attorney in Florida, said any entity having a hard time getting credit because of crushing debt will only have a harder time the longer it waits to receive protection from creditors. Bankruptcy may eventually lead to a fresh, or at least fresher, start, he said.

“If you can’t can you get credit today, tell me how bankruptcy would hurt your credit?” he said.

Orange County Supervisor Moorlach said Vallejo’s problem is that it’s spending more than it’s taken in each year, and it’s “creating obligations it never could afford and never should have made.”

Vallejo’s situation could be a forecast of what faces other municipalities which have agreed to “unsustainable employee and pension agreements,” he added.

While rare, other cities and municipal districts nationwide have felt similar pressures of dropping revenues and increasing expenses enough to file for bankruptcy or publicly consider it, like New York City.

Bridgeport, Conn., a city of 140,000, shocked the investment world in 1991 when it filed for Chapter 9 protection due to a $17 million deficit on its $300 million budget. Bridgeport faced $220 million in general obligation debt.

Based on Chapter 9 provisions, a city’s creditor separates into committees of unsecured creditors, like employees and contract services, and secured creditors with collateral-based debt, like bondholders. The city would then work to reach payment plans.

“Unsecured creditors don’t have to be paid,” Fritz said. “Anyone doing business with the city of Vallejo, like the garbage company, will be the first to get hit. Payments due them are not going to be paid right away.”

A judge would rule on any payment agreements based on a city’s financial ability and other factors, then oversee litigation if a city can’t reach a deal with creditors. But a judge won’t typically scour a city’s books to see if it could draw money that it isn’t already.

“A judge won’t throw out creative solutions,” Levinson said. “It’s really up to the players to come up with the deal. You continue to try to achieve peace rather than going to war. War is expensive.”

As the city works out deals, investment specialists are going to have a harder time selling municipal bonds, especially in California due to the state’s $14 billion budget shortfall.

“Outside investors are getting spooked by our fiscal imbalance,” Fritz said. “Once the city goes down in Vallejo, you’re going to see bond prices dropping like flies. A whole specter of bonds will get hit by one bad apple — it happens all the time on Wall Street.”

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