O.C. Legislative Package a Tough Sell to Democrats

Orange County’s pursuit of changes in state law to help it recover from bankruptcy is already being met with resistance by a Legislature long dominated by Democrats hostile to the Republican enclave.

A package of about two dozen bills that county lawmakers will introduce when a special session on the bankruptcy is convened next week includes several ideas that have previously been floated--and shot down--in the state Capitol.

Orange County lawmakers have tried to tone down such retreads by applying them only to the county instead of statewide and by limiting them to a period of two to five years.

But that hasn’t placated many Democrats. A proposal to allow Orange County to contract out more public-sector jobs, an idea that has annually put labor unions on the warpath, has once again drawn fire, as has a plan to allow the county to cut general assistance welfare benefits.

Among the other legislation the county is hoping to get approved are removal of mandatory pregnancy testing services and permission to make cuts in libraries, trial courts and health programs without jeopardizing state matching funds. The county also wants permission to charge jail inmates who can afford to pay for defense attorneys and a fee for medical and dental care.

Democrats are worried that even though the legislation would apply only to Orange County and has time limits, passage could prove to be a crack in the wall of resistance they’ve built over the years to proposals pushed by conservatives.

“It’s hard to imagine a lawmaker saying a bad idea is a good idea for a short time,” said Sen. Bill Lockyer (D-Hayward), Democratic leader of the Senate. “We’ve all seen short-term experiments turn into long-term policy. So there’s never a great deal of comfort with short-term.”

Lockyer and others also suggest that the solutions being offered up by Orange County are too heavy on sacrifice by the poor, when it was the bureaucratic elite who caused the troubles to begin with.

“I just don’t think it’s fair if you’ve had a breakdown at the top of the economic pyramid to have the people at the bottom of the pyramid paying for it,” Lockyer said. “As a general matter, these seem to be devices to squeeze middle-income employees or the elderly or poor.”

Those sentiments were echoed by Sen. Tom Hayden (D-Santa Monica), who sits on the Senate special committee studying the Orange County bankruptcy.

“I was disappointed,” Hayden said. “This makes it appear that the crisis was not caused by fiscal mismanagement but by liberal social programs. . . . This legislative package reflects the behavior of people who refuse to take responsibility for the terrible things they’ve done.”

Even so, Orange County lawmakers remain bullish, suggesting that the “ripple effect” posed by the county’s predicament will convince recalcitrant Democrats to go along with at least enough of the proposals to help.

“I think the urgency of Orange County’s situation gives a lot more credibility to some of these bills, even from the standpoint of some liberal legislators,” said Assemblyman Curt Pringle (R-Garden Grove), who is leading the delegation’s efforts. “Many of these ideas have been out there before and been rejected. It’s going to be a big battle to get any of the real significant measures passed. But I believe we’re ready for that battle.”

Pringle suggested that since “Orange County wants to solve some of their problems by changing the way government does business, people in Sacramento should celebrate that instead of trying to throw a monkey wrench in it.”

Dennis Carpenter, Orange County’s lobbyist in Sacramento, added, “We’ve got a county going under. That’s of statewide concern. It will affect the credit rating of every other local agency in the state. That’s the urgency in this. I can’t imagine anyone saying it doesn’t matter. It matters to everyone.”

Lockyer, however, said that such thinking is “the product of Disneyland fantasizing.” He also questioned whether the whole package of proposals will be enough to fill the financial void left by the financial debacle that has scuttled the county’s investment portfolio. So far, he said, no one seems to have that answer, and suggested that the freshly minted legislative ideas may merely be delaying a decision in Orange County to raise taxes.

“We all know the easiest way for Orange County to reassure Wall Street is to enact a tax to pay off these debts,” he said. “If that’s what we’re really trying to do, the quick and easy way to accomplish that is to be grown-ups and ask the voters to finance the debt restructuring.”

Pringle and other county lawmakers, however, are staunchly opposed to any sort of tax increase, suggesting instead that the county’s legislative proposals can go a long way to rectifying the problem. Chief among them is a proposed bill to allow the state to “intercept” Orange County’s tax revenues as a guarantee to jittery Wall Street investors that the county would eventually redeem for cash the bonds it markets in the coming months.

“These are no new dollars,” Pringle said. “This isn’t a bailout. All you’re doing is putting a filter in there. You’re saying that if the county doesn’t pay off what it borrowed, the state steps in to intercept that tax revenue and get it to the bond investors.”

Democrats seem to be in line to support that proposal. The Orange County delegation also will be hefting several other measures that could slide through the Legislature. Among them are proposals that would give the county more flexibility to sell its real estate holdings, streamline administration of welfare and Medi-Cal programs, expand the use of electronic court reporting, advance state payments for a variety of programs and suspend the county’s payment of some landfill fees.

County officials also hope to use the bankruptcy to propel legislation that would rectify a longtime complaint: that Orange County is a “donor county” that pays much more in taxes than it receives back from the state. Officials say Orange County received 17 cents of every property tax dollar, compared to 42 cents on the dollar in Los Angeles County and 33 cents statewide.

But even Republican boosters of the idea in Sacramento say the chances of any bill passing to rectify that discrepancy are limited.

“It’s a zero-sum gain,” one lawmaker said. “Every buck you pull in for Orange County comes from someone else who is going to fight to keep it.”

The Orange County delegation plans to introduce about 20 bills when the special legislative session convenes Feb. 17.

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Special Session Agenda

Orange County officials have assembled a package of bills to be introduced during the special session of the Legislature on Feb. 17. Here is a summary of what each bill would do:

* Intercept program: State takes portion of property tax money and vehicle license fees normally sent to Orange County and sets it aside to pay bondholders.

* Welfare: County streamlines welfare operation. Separate bill lets county cut administrative, other requirements for Aid to Families With Dependent Children and Medicaid, among other programs. A third bill temporarily waives law requiring support, care and medical services for indigents.

* Significant financial distress: Shortens process by which a county finds itself in “significant financial distress” in eyes of Commission on State Mandates; allows county to reduce aid payments to indigents.

* Mandate relief: Allows county and cities to temporarily discontinue variety of state-required programs.

* Matching funds: Waives county’s obligation to match state funds for host of programs, including library service grants, California Children’s Services State Aid, Medi-Cal, Elder Care, High-Risk Infant, Adolescent Family Life, Maternal Child Health Allocation, Drug Abuse State Funds, and Perinatal Expansion Funds.

* Advances in state payments: Instead of waiting for county to submit bills for reimbursement, state forwards money due county for variety of programs, including earthquake rehabilitation bonds, correctional facilities bonds, election services, child-care programs, family preservation and support, and abandoned infants assistance.

* Contracting out: Lets county contract out for any service.

* Court reporting: Launches pilot program of electronic court reporting in county’s Superior and Municipal courts.

* Inmate medicine: One bill allows county to maintain existing jail staff levels for mental health and medical services, rather than implement new state requirements. Second requires inmates to pay portion of their medical and dental bills.

* Maintenance of effort relief: Lets county avoid short-term state requirements for trial court fees, fines and forfeitures and the public library grant fund.

* Program flexibility: Allows county to suspend or defer state-required landfill closure costs, fees supporting state’s solid waste management program and other environmental measures.

* Public defender retainers: Makes criminal suspects using public defender’s office pay for service when financially able.

* Asset sales: Streamlines process for county and cities to market public assets.

* Property taxes: Removes restrictions preventing county general fund from accessing property tax revenue in special funds, such as harbors, beaches and parks, and flood control.

* Tax equity: Asks state to redistribute amount of tax revenue given each county, changing Orange County’s status as a “donor” county (it sends more revenue to the state than it gets back in grants and services).

* Teeter plan adjustment: Allows county to “make whole” other property tax recipients upfront while taking custody of all delinquent properties that would normally send part of taxes to other entities. County nets profit by keeping penalties and interest on delinquent tax payments. Also reduces amount required to be set aside to cover any losses when properties are sold at foreclosure.

* Teeter Note flexibility: Lets county exchange Teeter Notes for county’s delinquent tax liens, transferring debt service on notes to private firm.

* School reserves: Reduces reserves required for county school districts from 3% of total revenue to 1%.

Source: County Supervisor Marian Bergeson

Researched by JODI WILGOREN / Los Angeles Times