ORANGE COUNTY IN BANKRUPTCY : Tax-Hike Foes Say Report Gives Them New Ammunition

A much-anticipated report on ways to cut Orange County’s budget and increase revenue in its fiscal crisis will give new ammunition to opponents of a tax increase, according to a member of the influential Lincoln Club, who was briefed Tuesday on its contents.

The report by the Reason Foundation, scheduled to be released at an Orange County Forum luncheon today, includes suggestions for ways to enhance the value of John Wayne Airport to make it more attractive for sale, said Buck Johns, a prominent developer and Lincoln Club board member. The conservative club initiated the report and has helped pay for a portion of the costs of producing it.

Robert W. Poole Jr., president of the Santa Monica-based foundation, declined to discuss details of the 25-page document before its release today.

Johns, however, said it includes a variety of recommendations, all of which he hopes will help cool what he sees as a growing ardor for a tax increase among other Orange County business leaders.

The Orange County Business Council, an increasingly influential group that brokered a recent settlement plan offered to participants in the failed investment pool, has said a tax hike should form part of the solution to rescue the county from its fiscal crisis. But Johns and other Lincoln Club members are adamantly opposed.

Meanwhile, county officials on Tuesday received still another set of recommendations for ways to sort out the financial mess, this one from an expert adviser to interim County Treasurer Thomas E. Daxon.

Gerald Seals, the county administrator of Greenville County, S.C., said the county does not need to raise taxes in order to balance its budget, meet its obligations to bondholders and investors, and emerge from its crisis within 12 months.

“Government doesn’t always have to deal with issues by raising taxes,” said Seals, who spent a day and two nights in Orange County last week at Daxon’s invitation and the county’s expense to study the county’s financial crisis and offer potential solutions.

Daxon, the former Oklahoma state auditor, said he welcomed both the Seals plan and the Reason Foundation report, although he said he has not yet seen a copy of the latter. Daxon said he thinks “very highly” of both Seals and Poole and expects their recommendations to be examined carefully as the county works toward its own recovery plan.

Seals calls his theories on running government “rightsizing.”

“Conceptually,” he said in a telephone interview, “it is working to understand what should be the correct size for various services that a government provides based on the various needs of its citizens.” Applied to Orange County, Seals said, the method could shave about $520 million from the county’s budget over the next 12 months, thus creating a pool of funds from which to pay off bonds and investors without raising taxes.

His suggestions include:

* Eliminating about 1,000 county jobs created within the past fiscal year and an additional 1,600 positions that have remained vacant for some time.

* Reducing county services provided to areas where such services are duplicated by cities.

* Eliminating or privatizing some county functions such as architectural services, public relations, paramedic services and the purchasing and storage of supplies.

“Many people have focused on the general fund,” Seals said, “but I focused on the overall budget. . . . It’s a comprehensive portfolio of options.”

Poole, a privatization expert and the main author of his foundation’s report, would not confirm any specifics before his speech, but expects it to “play a major role in the ongoing debate” on the county’s financial future.

Johns said he expects it to help turn what he sees as a growing tide in favor of a tax hike among some county business leaders.

“We are convinced that a tax increase is probably the worst thing that can happen to the economic growth of our community, and we think the electorate agrees with us on that,” Johns said.

“We are in hopes that Poole can show us the way to increase government efficiency so we don’t have to (raise taxes) and we can convince everybody of that,” he added.

Among the report’s specifics, Johns said, are recommendations that Orange County try to persuade federal and state officials to “cut the strings” that now make it more difficult for it to sell John Wayne Airport, and to request that the federal government transfer title of El Toro Marine Corps Air Station to the county now rather than later, to allow the county to sell it as a package with John Wayne.

Also included, Johns said, are suggestions about ways to “capture and capitalize on” the estimated $50 million to $60 million that the county now makes each year from leasing property it owns and recommendations that the county explore the sale of some of its landfills, or look at “selling the right to put refuse in them.”

“I think the county has a real opportunity here,.” he said.