It Was a Debt That Would Live in Infamy, but Most of O.C. Forgot

Ten years after Orange County’s bankruptcy led to painful cuts in government spending and a billion-dollar debt that won’t be repaid for decades, the vast majority of county residents are virtually unaware of the largest municipal default in U.S. history.

In a survey released today by the San Francisco-based Public Policy Institute of California and UC Irvine, 81% of respondents said they knew little or nothing about the bankruptcy, which resulted from huge losses in the county’s investment pool due to mismanagement.

And it’s not just newcomers: 64% of those surveyed who have lived at the same address 20 years or more were unaware of one of the biggest events in county history -- one that continues to limit spending on healthcare, parks, roads and other government services.

“I was surprised it was so out of sight, out of mind,” said Mark Baldassare, the survey’s director. “The people who have had to live with the consequences of the bankruptcy may not realize that the reduction of services they see is the result of the bankruptcy itself.”

One reason, he said, was the economic boom that followed the bankruptcy. As the local economy roared ahead -- adding jobs and boosting home prices -- the county’s fortunes and the attitudes of its residents steadily improved.

Add recent Republican Party election victories -- Gov. Arnold Schwarzenegger and President Bush both garner higher approval ratings in conservative Orange County than statewide -- and what emerges is the picture of a content place where the future looks bright.

Nine of 10 people surveyed were satisfied with the quality of life in Orange County, similar to numbers for recent years but up dramatically from 68% in 1995, the year after the bankruptcy. Meanwhile, about half the respondents feel county government is doing an excellent or good job solving problems, twice as many as in 1996, when the county limped out of bankruptcy protection shouldering its massive debt.

“With the passage of time, many people just moved on,” Baldassare said.

But about a third of respondents said the bankruptcy, in general, continued to weigh on Orange County’s quality of life and economy.

They tended to be the same people who said they know a lot about the events that culminated in the December 1994 default.

The 23rd annual survey of Orange County attitudes was based on telephone interviews in English or Spanish with 1,008 adults whose phone numbers were chosen at random.

The margin of sampling error of the survey, conducted between Nov. 3 and 9, is plus or minus 3%.

The availability and cost of housing topped the list of issues facing the county, with three in 10 residents saying high real estate prices may force them to move.

Renters are more than twice as likely as homeowners to say that housing costs are straining their budgets.

But homeowners are worried too. Only a quarter considered it “very likely” that they could afford a more expensive home in Orange County, and 59% said they were “very concerned” their children wouldn’t be able to afford a home locally at all.

Nevertheless, 81% felt Orange County real estate -- even at current lofty prices -- remained an excellent or good investment.