Fall 2003

Table of Contents

Cal-Tax Home

Email Editor

Guest Commentary 

Reed L. Royalty is president of the Orange County Taxpayers Association. (This commentary appeared, slightly edited, in the Orange County Register of August 28, 2003.)

Unlike the bankrupt state and federal governments, Orange County’s county, city, and special district governments provide essential, unglamorous services that taxpayers generally don’t mind paying for. They provide police and fire protection, libraries, streets, lighting, sidewalks, buses and parks. They put crooks in jail, pick up the garbage, and operate water and sanitation systems.

The Orange County Taxpayers Association (OCTax) admires local governments that provide useful services efficiently.  In the year 2000 we met with Lake Forest Mayor Richard Dixon and City Manager Bob Dunek to dig into the management practices of that city. Here are a few of the laudable things we found at that time:

• Lake Forest has no stately, columned, costly city hall. It operates from an ordinary office building.

• Lake Forest saves taxpayers’ money by contracting with private firms and other governmental agencies to provide services. In 2000, the city paid the Sheriff’s Department $6.8 million per year for law enforcement ($8.6 million in 2003), less than the cost of a stand-alone city police department. Other contract services are fire protection, recreation, legal, building and safety, planning, engineering, park maintenance, trash collection, surveying, and street maintenance.

• Lake Forest spends less than its income. Its General Fund in the year 2000 had an $8.5 million cushion for emergencies, equivalent to 56% of the city’s annual budget.

This year, OCTax revisited Lake Forest to see how well the city has withstood the seemingly inevitable pressure to grow government and staff. Here’s what we found:

Lake Forest still operates from leased office space. Nothing fancy. If you’ve been there, you will forgive the city for looking for other leased quarters. Since 2000, the city has grown from 10 square miles to 16, and its population has grown from 56,000 to 77,000. The number of full-time employees has grown from 33 to 53 – still only one employee per 1,453 residents. Some other cities have much higher ratios of employees to residents. (The county’s efficiency champion may be the City of Rancho Santa Margarita, which has only 14 full-time employees serving 49,000 people, or one employee per 3,500 residents.)

Lake Forest’s annual budget is $26,153,000, or $340 per resident, less than the average for cities in Orange County. Lake Forest continues to spend less than its income, and its cushion for emergencies has grown to $18.4 million, or 70% of the operating budget.

A Performance Pay System implemented in 2000 appears to be working. Lake Forest grants pay increases according to performance; unlike governmental jurisdictions such as the County of Orange, the city gives no automatic annual pay increases and bonuses merely for meeting job requirements.

Lake Forest continues to find creative benefits in “contracting out.”

• The city has the lowest workers’ compensation insurance costs of all cities in the California Joint Powers Insurance Authority, which includes over 100 public agencies. That is largely because the city contracts out many higher-risk positions, such as maintenance and road-repair workers. The contracts indemnify the city against claims by contract employees who are injured while working in the city. (OCTax suspects that private contractors manage employee costs and risks more frugally than tax-supported agencies).

• Contracting allows adjustments in work force due to changes in workload. For example, Lake Forest adds or deletes building inspectors as needed, without hiring or laying off workers.

• Contracting for street sweeping, road maintenance, and other field services eliminates the need for acquiring, building, and operating a public works yard.

• Lake Forest offers a fair complement of recreation programs without city-owned facilities. The city offers billiards to seniors at a local billiards parlor, bowling for teens at a commercial bowling alley, and recreational and instructional classes at privately owned clubhouses of some of the city’s 70 homeowners’ associations.

• The city partnered with the county to build community rooms at two public libraries. The rooms accommodate community classes and programs, while minimizing costs to taxpayers.

OCTax recognizes that the City of Lake Forest (founded 1991) cannot be compared fairly to Orange County’s larger and older cities, which generally do a good job for taxpayers even though some of the cities were founded a century ago when few agencies and commercial vendors were available for contracting out. Older cities have unusual budget items that swell their receipts and expenditures: federal grants, big redevelopment programs, enterprise funds, city-owned utilities and resort facilities. Urban problems that afflict older cities are only beginning to be felt in young Lake Forest.

Despite these differences, OCTax hopes that other Orange County cities learn by the example of lean cities such as Lake Forest and become more businesslike, unbureaucratic, and taxpayer-friendly.