Butte County OKs Bailout Offer to Avoid Bankruptcy

Butte County supervisors, narrowly averting the nation’s first county bankruptcy, on Tuesday approved the $11.1-million bailout offered by Gov. George Deukmejian.

The five-member board voted 3 to 2 to accept the Republican governor’s proposal, which local officials said will avert immediate bankruptcy but will leave next year in doubt.

“We’re only putting off the inevitable,” said Supervisor Hack McInturf.

Under the agreement, Deukmejian proposed deferring more than $6.3 million owed the state for fire protection services, postponed the state’s demand for payment of a $2-million matching share for a new Butte County jail and offered a $1.15-million direct cash grant. The payment deferrals will allow the county to use those funds for local programs and services.

The proposal also calls for the county to raise about $1.65 million by increasing local fees, including property taxes and jail booking fees.

As part of the agreement, the county agreed to scale back on requests for new law enforcement services, pay increases and other programs. The county said earlier that it needed $14.1 million to keep from going bankrupt, a figure that included expanded jail facilities and more deputies.

But on Tuesday county officials said they could survive with the $11.1 million to balance the budget.

The crisis arose after county officials were unable to balance this year’s $155-million budget, saying that 85% of their money was locked into existing programs by statute--such as welfare and health care for the poor, and fire protection services.