ORANGE COUNTY IN BANKRUPTCY : State Lawmakers Offer Flurry of Bills Addressing O.C. Crisis : Legislature: One package is championed by county treasurers worried about new restrictions. Partisan wrangling continues in the Assembly.

State lawmakers introduced a rash of bills Thursday designed to address the Orange County bankruptcy, including a package of proposals championed by county treasurers worried about having their investment opportunities curtailed by hostile new laws.

An Orange County lawmaker also offered up legislation that would allow the state effectively to guarantee loans used to bail out the troubled county, a measure designed largely to assuage the concerns of anxious Wall Street investors.

In the Assembly, lawmakers voted along partisan lines to elect officers for an ongoing special session dealing with the bankruptcy and formed a special committee to consider bills related to the county’s financial woes.

Sen. William A. Craven (R-Oceanside) and Sen. Lucy Killea (I-San Diego), who co-chair the Senate special committee studying the Orange County debacle, introduced a package of eight measures at the behest of county treasurers that would strengthen reporting requirements for public investment pools, create an oversight panel for the portfolios and set limits on some types of investments.

The measures, sponsored by the California State Assn. of County Treasurers and Tax Collectors, are a response to several bills introduced soon after Orange County filed for bankruptcy protection in December that would severely restrict the investment options for county portfolios and enact strict reporting requirements for treasurers.

Barbara J. Coates, Plumas County treasurer and president of the state association, said she considered the group’s package “prudent, reasonable and well thought-out reform” rather than an “overreaction that could have a potential for damaging the performance of portfolios across the state.”

Some bills introduced earlier go too far, she said. “Anyone at any time can misinterpret or flagrantly ignore the law,” Coates said. “But this provides additional safeguards to protect counties.”

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Among the other proposals put forth on behalf of Coates’ group are a measure that would allow counties to impose minimum qualifications and continuing education requirements on elected treasurers. Treasurers would be required to hold degrees in accounting, finance or similar fields.

Another bill would prohibit treasurers from borrowing short term to invest for longer terms--a tactic that got former Orange County Treasurer-Tax Collector Robert L. Citron into trouble. Yet another would restrict investments in reverse repurchase agreements.

In the Assembly, meanwhile, there were no surprises in the selection of officers for the special session. Willie Brown, the longtime Democratic Assembly speaker, was named to preside over the special session, and Assemblyman Joe Baca (D-San Bernardino) got the nod for speaker pro tem.

A minor dust-up occurred when Assemblyman Jan Goldsmith (R-Poway) challenged Brown’s authority to name members of a bipartisan special committee that will hear the bankruptcy-related bills.

Brown overruled Goldsmith and named Assemblywoman Marguerite Archie-Hudson (D-Los Angeles)--a liberal ally--to chair the committee. Archie-Hudson already has joined the speaker in calling for Orange County to bail itself out with new taxes and a private prison at El Toro Marine Corps Air Station.

In general, however, Republicans were talking more optimistically Thursday about the chances that at least some of the Orange County recovery legislation might escape the wrath of Democrats in the Assembly, who last week took delight in tweaking the conservative county over its financial problems.

“I think they realize Orange County’s troubles pose a significant impact on every municipality in the state and they have to be part of crafting solutions,” said Assemblyman Curt Pringle (R-Garden Grove), who is leading the county’s legislative push. “I think they’re now prepared to begin this process in earnest.”

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Archie-Hudson said she expects her special committee to begin hearings in the next 10 to 12 days. For the first three or four weeks, the committee will investigate the problems surrounding the bankruptcy and then tackle various bills in the weeks that follow.

“We expect the committee to be very active for the next three months working this through,” Archie-Hudson said.

Democrats and Republicans have been sharply at odds over how to tackle the crisis. Orange County Republicans have pushed for relief from state-mandated social programs and increased leeway to privatize county functions. Democrats say the county should more seriously consider a tax increase among its bailout options.

While the Republicans are optimistic, Archie-Hudson gave no indication Thursday that she or other Democrats will back away from a tough stance.

“We recognize that Orange County doesn’t want to have a tax increase, but no county wants to have a tax increase,” she said. “They’re not unique in that respect.”

Archie-Hudson also said that Orange County’s desire to “downsize services and welfare” amounts to an “insufficient answer” to the problems. “We are concerned that children and poor people not bear the brunt of what looks to be irresponsible practices” by county officials, she said.

Pringle introduced a measure Thursday that would set up an “intercept plan” allowing the state to seize county sales tax revenues if Orange County failed to make payments on bonds it will need to sell in the coming months as it grapples with a mounting budget deficit and nearly $1.7 billion in investment losses.

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Two Orange County senators, meanwhile, introduced a half-dozen bills of their own into the special session.

A pair of measures by Sen. Rob Hurtt (R-Garden Grove) would allow the county to contract out services and curtail some costly state-mandated programs. Sen. John R. Lewis (R-Orange) introduced four bills, including one that would allow the county to raise cash by selling off delinquent tax liens and another to free up money by reducing the size of certain county reserve funds.