Brown Dims O.C. Hopes of State Aid in Financial Crisis : Bankruptcy: Speaker, annoyed at ‘posturing’ by county officials, says tax increase and appointment of trustee must precede any help from Sacramento.

Miffed at what he describes as Orange County’s “political posturing,” California Assembly Speaker Willie Brown said Monday that the chances of the county receiving state aid to resolve its financial crisis are “not great.”

Brown said that unless the county agrees to be placed under the supervision of a state trustee and raises the sales tax, there is little hope the state will lend a hand.

“Orange County has not met the threshold of assistance either by their formal request or their conduct,” he said during a visit to the Capitol.

In Orange County, Chief Executive Officer William J. Popejoy also seemed dubious about any aid to help the county out of its bankruptcy.

“At this point, it appears Sacramento is not interested in doing much for us,” he said when told of Brown’s remarks. “I’m very doubtful. They just seem to be turning their back on us.”

Brown, who along with other state leaders is in Washington for meetings with federal officials on a variety of topics, including immigration and crime, also said that a federal bailout for Orange County was not on his list of discussions.

“I am not in Washington asking for any assistance for Orange Count whatsoever,” Brown said during an interview with reporters and editors at The Times’ Washington Bureau. “(Orange County officials) didn’t ask me to ask, and since I am not in Orange County, I don’t know what the real circumstances are.”

Brown’s coolness toward Orange County comes in the aftermath of talks that he held with county officials and business community leaders.

Following a private meeting March 4 in Orange County, where he heard first-hand about the county’s cash crunch, Brown invited a contingent of county officials and business leaders to make its case to the state Assembly.

But Brown said he was piqued that during their appearance last Wednesday before the Assembly, county officials departed from their factual presentation of the bankruptcy “workout” plan that had been shown to him in private. Instead, he said, county officials focused on the dire consequences to the schools if the state aid did not come through. Brown contended the “school” spin was taken for political purposes.

“Somebody got to them and said, ‘You ought to make this political. You ought to just say (to the Assembly) you ought to help because of schools,’ ” Brown said. He added that instead of county officials accepting responsibility for the financial debacle, they placed the bulk of the blame on its broker, Merrill Lynch.

“Somebody talked them into that political posturing,” Brown said.

But Popejoy and County Supervisor Marian Bergeson, who both attended the private briefing with Brown, said politics only entered the presentation to the Assembly because of lawmakers’ questions.

“The same information was presented. The very same charts were presented. The information was identical,” Bergeson said of the two meetings. “The questions from the members on the (Assembly) floor is where the politicization came from.”

Orange County officials are pushing a plan to have the state guarantee the county’s $255 million in recovery notes, and are offering to put up some property, such as John Wayne Airport, as collateral.

As county officials told Assembly members last week, the focus of their efforts are local school districts, many of which face insolvency if they are not quickly reimbursed for the money they had invested in the county’s failed investment pool.

County officials are still negotiating various ways in which the state could lend its name to back county bonds, thus helping repay school districts sooner. The districts had about $1 billion in the county’s investment pool, whose nearly $1.7-billion plunge last year led to Orange County filing for bankruptcy protection Dec. 6.

As part of a proposed settlement plan, the schools would receive 77% of their investment in cash and 13% in recovery notes that would be paid over 15 years. County bankruptcy attorney Bruce Bennett and Popejoy have suggested various ways in which the state could help turn those recovery notes into cash more quickly by backing a county loan or bond issue.

“We’re going to continue to push for help,” Popejoy said, though admitting the prospects have dimmed. “We’re not asking for something that should put the state at risk. The county has a short-term cash need. We can borrow cash and we can pay it back. What we need is a guarantor.”

Brown said the Assembly has not responded to the county’s plan because it has not been submitted as a “formal request.”

Asked what are the chances of Orange County receiving state aid, Brown replied, “They’re not great because they didn’t come clean. And believe me, nobody is going to give them any money without a (state-appointed) trustee. I don’t even think the governor will agree to assist without a trustee.”

Gov. Pete Wilson has repeatedly urged Orange County to fix its own problems with as little state assistance as possible. The county’s congressional delegation also has steered clear of federal assistance for the county, arguing that a bailout is the state’s responsibility.

Brown also repeated his contention that the three members of the Board of Supervisors who were in office when the bankruptcy occurred--Supervisors Roger R. Stanton and William G. Steiner and Board Chairman Gaddi H. Vasquez--should resign before the county receives help from Sacramento.

“I would think that you would make a better case to me that the people who messed it up took a hike,” Brown said, adding that those “who did all the mismanagement that they obviously did . . . should not be then asking us to assist them in any way.”

But the supervisors reiterated their intent to stick it out.

“I just got elected,” Steiner noted, “and I’m prepared to discharge my responsibilities for the next four years.”

Absent their resignations or a recall by voters, Brown insisted a trustee would have to be in charge to restore order to the county’s finances--a requirement previously imposed on school districts or municipalities that ran into financial problems and required the state’s help.

“Usually, if it involves any state money, or the state putting up its credit in place, we have required a trustee, and that trustee has been given full charge and responsibility to get the house in order,” Brown said. “And the trustee doesn’t leave until the house is in order and the state’s exposure has been minimized.”

Popejoy and the supervisors said they remain unclear about the specifics of the trustee proposal and are not yet convinced of the need.

“I don’t know what a trustee would add,” Bergeson said. “What we need is a vote of confidence (from the state) and an understanding that those who live and work with this problem on a day-to-day basis--and have to live with the results of it--are far better positioned than someone coming from Sacramento or some other place to tell us what we should or shouldn’t be doing.”

Bergeson said she still holds out hope that the state will come through.

“That spirit of cooperation is emerging,” she said. “We need their help by facilitating. We’re not asking for them to send huge amounts of money. We’re asking for a vote of confidence.”

However, Brown said that county officials’ hesitation about a trustee and their refusal to consider a sales tax increase leave him reluctant to help Orange County.

“The state will not put a nickel in until you have exhausted your own resources,” he said.