No Rush in Sacramento : Orange County’s bankruptcy seems to be causing few ripples there

Each passing day makes Sacramento’s puzzling distance from Orange County’s bankruptcy more problematic. After all, the crisis will not be confined to the state’s third-largest county. Gov. Pete Wilson finally spoke out directly on the subject Thursday; while sympathetic, he did not offer much by way of assistance. Meanwhile, the Legislature tunes its fiddles while Orange County struggles to find ways to cope.

The bankruptcy means that when any Orange County agency, or the county itself, tries to float bonds, it will face a tough sell. The taint is likely to spread to agencies across the state, according to Wall Street gurus.

It is important to remember that Orange County’s problems were compounded in recent years by the state solving its budget crises with raids on county funds. Unable to increase taxes under Proposition 13 and stung by plunging interest payments on investments, Orange County turned to risky methods of finance.

The state also supplied a shovel to help the county dig its hole 15 years ago when the Legislature unanimously approved a bill championed by Robert L. Citron, who resigned this week as Orange County’s treasurer-tax collector. It allowed localities to use the financial legerdemain that wound up plunging the county into bankruptcy.

The Legislature should quickly change that law, bringing California into line with the many other states that restrict investments by cities, counties and public agencies to conservative investments such as federal government bonds and top-rated corporate bonds.

Wilson did seem to recognize the need for state action on that front, but legislators--presently squabbling over whether the Assembly Speaker is to be a Democrat or a Republican--seem to be too busy to pay attention. We need action, not paralysis.

How about considering speeding up state payments to Orange County to tide agencies over? Might the state, despite its own budget problems, guarantee loans? Sacramento must learn some lessons from last month’s election. Govern. Lead. Offer help.