Battle Looms as Special Session on O.C. Aid Begins : Bankruptcy: Assembly Speaker Willie Brown rejects plan by Orange County legislators, calls for sales tax hike and state trustee. Republicans proceed with recovery bills.

As state legislators convened a special session Friday to help Orange County recover from the nation’s worst municipal bankruptcy, Democrats and Republicans in the Assembly quickly drew battle lines in what could become an all-out ideological war.

Assembly Speaker Willie Brown flatly rejected a recovery plan championed by Orange County legislators, pushing instead for a state trustee to take over operation of the beleaguered county, a one-cent county sales tax increase and a privatized prison complex at El Toro Marine Corps Air Station.

“I’m going to treat Orange County with the same degree of consideration that Orange County’s legislators have treated the rest of the state in its time of (past) crisis,” Brown said, referring to the county delegation’s stiff opposition to taxes to aid other parts of California hit by disasters, such as the 1989 Bay Area earthquake.

Orange County Republicans, meanwhile, continued to press ahead with a package of bills designed to privatize many county services, strip costly state mandates and cut some welfare programs. In the Assembly, 19 measures were introduced, while several more were expected to be offered up in the Senate when the Legislature reconvenes Tuesday.

“Orange County voters don’t want tax increases,” said Assemblyman Curt Pringle (R-Garden Grove), who is helping shepherd the county’s legislative package. “Democrats may be thumping their chests to drive it in that direction, but that certainly doesn’t drive the Orange County voter.”

Assemblyman Jim Brulte (R-Rancho Cucamonga), the house’s Republican leader, said the looming battle over how best to help the county will pit “status quo versus change.”

“The Democrats want to maintain the status quo--onerous state mandates on Orange County, additional state requirements like a trustee,” he said. “Republicans are supporting change, freeing up Orange County and giving it greater flexibility to recover.”

Republicans also suggested privately that Brown and the Democrats were using the special session to punish Orange County, a staunchly conservative region that helps propel Republican candidates to victory in statewide races.

Others voiced confidence that the county’s dire predicament--it suffered nearly $1.7 billion in investment losses--and the potential repercussions for other California municipalities will ultimately quiet the Democrats.

“If Orange County is pushed into default, there will be a ripple effect not only on other local jurisdictions, but on the state itself and its ratings,” said Dennis Carpenter, Orange County’s lobbyist.

During a day marked more by posturing than pomp and ceremony, Brown didn’t leave Republicans much maneuvering room.

Both houses convened the special session in the morning, ran through some formalities and, after less than five minutes on the topic of Orange County, adjourned for the long weekend.

In the Senate, President Pro Tem Bill Lockyer (D-Hayward) said that in contrast to the pyrotechnics of the Assembly, “We’re trying to find solutions in a constructive, positive way that isn’t political or retributive” against Orange County’s conservative legislators.

Brown, however, quickly performed an act rich in symbolism: He named one of the Assembly’s more liberal members--Marguerite Archie-Hudson (D-Los Angeles)--as chairwoman of an evenly divided, 18-member Select Committee on the Insolvency of Orange County that will consider the recovery legislation.

“Every option ought to be on the table,” Archie-Hudson told reporters after the session. “It seems to us the first option should be those that raise revenues.”

She said Orange County needs to recognize the opportunity and levy a one-cent sales tax increase, which would provide about $268 million in additional annual revenue for the county. (Such an increase would raise Orange County’s sales tax from 7.75% to 8.75%, compared to 8.5% in Los Angeles County and 7% in San Diego County.)

With Republicans opposed to any new taxes, Brown said, he wants to hinge any relief from the state on the approval of the sales tax increase in Orange County, an increase that would have to be approved by the county’s voters.

Brown also extended a carrot of sorts, proposing a $60-million loan to the county’s schools. But even that gesture was laced with irony; the funds would come from revenue earmarked for transportation improvements required for a proposed expansion of Disneyland in Anaheim.

He also had an ironic suggestion for a state trustee to run the county during its financial crisis--County Supervisor Marian Bergeson, a former state senator and longtime Brown opponent. “I think she very well could run Orange County,” Brown said.

As for a prison at El Toro Marine Corps Air Station, which is scheduled to be closed by 1999, Brown said that “you know they have some wonderful things down there. That El Toro military base could work very well. . . . Orange County should have its own prison.”

None of the proposals voiced by Brown were introduced as bills.

As for the county’s legislative efforts, Brown was taking no prisoners.

“I don’t think there will be any mandate relief, I don’t think there would be any contracting out,” Brown said, suggesting it would be akin to handing “these Las Vegas-type gamblers more money” to work with. “I’ve been to Las Vegas and I’ve watched people who have an insatiable attitude to gamble. It’s a sickness.”

Brown also said that Republicans may “read tomorrow’s news stories” about his proposals and pull back from the special session. “They may decide they don’t want to submit themselves to a trusteeship, they don’t want to impose the sales taxes, they don’t want Marian Bergeson to just take over and run the county.”

Republicans were hardly amused.

“I’d be very surprised if they (Democrats) continue this posturing for the next couple of weeks,” said Pringle, who chairs the Assembly’s Appropriations Committee. “I think they have no idea what’s in this package. . . . Sure, they’ll say there’s some of (the bills) they don’t like. They’ve been saying that for years.”

The county’s legislative package includes several ideas previously voiced--and defeated--in the state Capitol. Orange County legislators have tried to pump up such retreads by applying them only to the bankrupt county instead of statewide and limiting them to a temporary period.

Among the ideas prompting Democrats’ anger is a proposal to allow the county to temporarily contract out more public sector jobs--an idea that for years has drawn fire from labor unions. The county also wants to cut general assistance welfare benefits, a program long protected by Democrats.

Other measures include 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 jail inmates who can afford it to pay for defense attorneys and for medical and dental care.

Democrats are worried that even though the legislation applies specifically to Orange County and has set time limits, passage could prove to be a crack in the wall of resistance they have built over the years to proposals pushed by conservatives.

But several bills could survive the session. Chief among them is a measure to allow the state to intercept Orange County’s tax revenues as a guarantee to Wall Street investors that the county would pay back bailout bonds it markets.

The Orange County delegation also introduced measures to give the county more flexibility to sell its real estate holdings, privatize John Wayne Airport, streamline administration of welfare and Medi-Cal programs, advance state payments for a variety of programs and suspend the county’s payment of some landfill fees.

Times staff writer Jerry Gillam contributed to this story.