In the government-reform debate sparked by the county bankruptcy, the Irvine Ranch Water District is something of a Rorschach test.

Supporters see the district as a model of good government, an innovative, responsible agency that charges some of the lowest water rates in the county yet still manages to maintain reserves of nearly $100 million.

To critics, however, the agency exemplifies an "expansionist" government bureaucracy so flush with taxpayer dollars that it can afford to purchase luxury apartments in Anaheim and offer loans to financially troubled school districts.

Then there are some who find validity in both views.

"In the big picture, the [water district] does a good job for its constituents. They have been innovative in positive areas and have saved taxpayers money," said Irvine Councilman Barry J. Hammond. "But creativity can sometimes step over the line and focus on areas where [government] should not be."

Those differing views over where to draw the line is likely to receive more attention in the coming months as leaders in Orange County and Sacramento grapple with the future of special districts such as the Irvine Ranch Water District.

Assembly Republican Leader Curt Pringle of Garden Grove recently called for the consolidation of the county's more than 20 independent sewer and water districts into one countywide entity that he says would boost efficiency.

Meanwhile, conservative and libertarian groups continue to push for the transfer of many government functions, including some utility services, into the hands of the private sector.

Though Irvine Ranch is just one of many agencies that would be affected by the various proposals, it has become an unlikely lightning rod in the movement to restructure government.

During last year's Measure R fight, activists against the proposed county sales tax increase repeatedly pointed to Irvine district's hefty reserves and real estate investments to bolster their contention that agencies hurt by the bankruptcy didn't deserve taxpayer bailouts.

A study last year by a libertarian think tank found that selling the agency and other major water districts to private companies would generate significant tax revenue and result in more cost-effective management.

"It's a choice between a government-owned monopoly and free-market competition," said Rich Phillips, spokesman for the Los-Angeles-based Reason Foundation.