When Government Fails: The Orange County Bankruptcy
When Orange County, California, filed for Chapter 9 protection on December 6, 1994, it became the largest municipality in United States history to declare bankruptcy. In the first comprehensive analysis of this momentous fiscal crisis, Mark Baldassare uncovers the many twists and turns from the dark days in December 1994 to the financial recovery of June 1996. Utilizing a wealth of primary materials from the county government and Merrill Lynch, as well as interviews with key officials and players in this drama, Mark Baldassare untangles the causes of this $1.64 billion fiasco.
He finds three factors critical to understanding the bankruptcy: one, the political fragmentation of the numerous local governments in the area; two, the fiscal conservatism underlying voters' feelings about their tax dollars; three, the financial austerity in state government and in meeting rising state expenditures. Baldassare finds that these forces help to explain how a county known for its affluence and conservative politics could have allowed its cities' school, water, transportation, and sanitation agencies to be held hostage to this failed investment pool. Meticulously examining the events that led up to the bankruptcy, the local officials' response to the fiscal emergency, and the road to fiscal recovery—as well as the governmental reforms engendered by the crisis—When Government Fails is a dramatic and instructive economic morality tale. Eminently readable, it underlines the dangers inherent in a freewheeling bull economy and the imperatives of local and state governments to protect fiscal assets. As Baldassare shows, Orange County need not—and should not—happen again.
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The Orange County Setting
The California Context From Proposition 13 to Fiscal Crisis
Events Leading up to the Bankruptcy
Response to the Fiscal Emergency
The Road to Recovery
Reforms after the Crisis
Lessons Learned from the Bankruptcy
agencies Angeles Times Orange ballot Board of Supervisors Bob Citron bond borrowed California chief executive officer county charter County financial crisis county fund county gov county government County Investment Pool county leaders County of Orange county officials county pool county services county treasurer county treasurer's county's debt December Democrats elected officials ernment favor federal fiscal austerity fiscal crisis fiscal emergency fiscal problems Gaddi Vasquez government investors immigration interest income interest rates June legislation legislature losses Measure ment Merrill Lynch million needed Orange County bankruptcy Orange County Board Orange County Edition Orange County financial Orange County Investment Orange County Poll Orange County Register Orange County voters percent political fragmentation pool participants Popejoy population programs property tax Proposition 13 raising taxes recovery plan reforms Republicans repurchase agreements restructuring ruptcy sales tax school districts SOURCE special districts spending suburban regions survey Table term limits vote voter distrust