Modoc looks at bankruptc
Modoc Struggles with Chapter 9
080110
The State of California is frantically trying to broker a “Payday Loan” for struggling Modoc County.
The little county has a population of 9,000, and like Sierra County, lived off cattle and timber for much of its history. Get an excellent overview of the county HERE
On the 19th of July the Board voted 4-1 to employ a bay area law firm to represent them through the bankruptcy and subsequent loans. The firm will cost $100,000 up front, and more in $25,000 chunks as they go. The county is about 15 million in the hole.
The Board allegedly misused $12.5 million (some estimates go as high as $20 million), which has to be paid back to the state before another loan can be issued.
So, like a small business or a family, Modoc finds itself in a financial hole with no way out except to dig deeper, go farther into debt. Otherwise, the county will find itself being sued by creditors and unions.
Critics would note that the Modoc Board mis-spent millions of dollars, but this might not be true, as the Board is hoping that it’s transfers of Treasury monies were legal. That is pending a decision in a similar court case. If the Board’s actions were found legal, some or all of their most damaging debt would be removed. It’s far from certain this is how things would go, though, and even so, the county would continue to have tens of millions in debt to serve. Dice that up among the 9,000 residents.
The real problem is that small counties can’t live under the mandates from the State, particularly when the state continues to cut services and withhold funds from counties. The sources of revenue counties enjoyed seventy years ago were replaced with state and federal funds (like Williamson and Secure Rural Schools) twenty years ago, and now, there simply isn’t enough income to support life in rural areas. It costs a large county much less per person to provide services than it does a small county. Government is the largest employer in most such counties and Modoc is no exception, particularly since the majority of the county is federal land, the feds don’t pay taxes. Northern rural counties grow beef, steward forests, clean the air and water, and in return we can scarcely feed our families or provide basic county services. County departments have the same requirements in cow counties as in Orange county, and in many cases more because they wear more hats. The state requires counties to enforce a raft of state laws many of which don’t apply well in rural areas.
It’s easy to believe that Modoc County supervisors played fast and loose, and mismanaged funds, but likely they were doing what the poor do under such circumstances, robbing Peter to pay Paul. The hospital seems to be pulling the county down, a tale familiar to us, and Modoc is much farther from a regional hospital than we are.
Sierra County, thanks to the skill of our staff, the judgement of our supervisors, and Dave Goicoechea’s lucky rabbit’s foot, is currently holding the line against such desperate times, but they might well be down the road, living as we do as serfs of the urban counties.
Learn more about Modoc finances HERE
Never been to Modoc County? It’s rich with wild lands, lakes, and hardworking people. Some of California’s most dramatic history happened there, and some of its most fantastic landscapes are found there. Visit Modoc this summer, you’ll be glad you did.
080110
The State of California is frantically trying to broker a “Payday Loan” for struggling Modoc County.
The little county has a population of 9,000, and like Sierra County, lived off cattle and timber for much of its history. Get an excellent overview of the county HERE
On the 19th of July the Board voted 4-1 to employ a bay area law firm to represent them through the bankruptcy and subsequent loans. The firm will cost $100,000 up front, and more in $25,000 chunks as they go. The county is about 15 million in the hole.
The Board allegedly misused $12.5 million (some estimates go as high as $20 million), which has to be paid back to the state before another loan can be issued.
So, like a small business or a family, Modoc finds itself in a financial hole with no way out except to dig deeper, go farther into debt. Otherwise, the county will find itself being sued by creditors and unions.
Critics would note that the Modoc Board mis-spent millions of dollars, but this might not be true, as the Board is hoping that it’s transfers of Treasury monies were legal. That is pending a decision in a similar court case. If the Board’s actions were found legal, some or all of their most damaging debt would be removed. It’s far from certain this is how things would go, though, and even so, the county would continue to have tens of millions in debt to serve. Dice that up among the 9,000 residents.
The real problem is that small counties can’t live under the mandates from the State, particularly when the state continues to cut services and withhold funds from counties. The sources of revenue counties enjoyed seventy years ago were replaced with state and federal funds (like Williamson and Secure Rural Schools) twenty years ago, and now, there simply isn’t enough income to support life in rural areas. It costs a large county much less per person to provide services than it does a small county. Government is the largest employer in most such counties and Modoc is no exception, particularly since the majority of the county is federal land, the feds don’t pay taxes. Northern rural counties grow beef, steward forests, clean the air and water, and in return we can scarcely feed our families or provide basic county services. County departments have the same requirements in cow counties as in Orange county, and in many cases more because they wear more hats. The state requires counties to enforce a raft of state laws many of which don’t apply well in rural areas.
It’s easy to believe that Modoc County supervisors played fast and loose, and mismanaged funds, but likely they were doing what the poor do under such circumstances, robbing Peter to pay Paul. The hospital seems to be pulling the county down, a tale familiar to us, and Modoc is much farther from a regional hospital than we are.
Sierra County, thanks to the skill of our staff, the judgement of our supervisors, and Dave Goicoechea’s lucky rabbit’s foot, is currently holding the line against such desperate times, but they might well be down the road, living as we do as serfs of the urban counties.
Learn more about Modoc finances HERE
Never been to Modoc County? It’s rich with wild lands, lakes, and hardworking people. Some of California’s most dramatic history happened there, and some of its most fantastic landscapes are found there. Visit Modoc this summer, you’ll be glad you did.
