3 on Business Council Call Tax Hike Necessary to Save County : Forum: The trio praise the political prudence of supervisors and say the crisis affords residents an opportunity to review and reinvent government.


Three members of the Orange County Business Council, a group of business leaders active in trying to resolve the county's financial woes, told a forum of local executives Thursday that a proposed half-cent sales tax increase is necessary for the county to avoid additional problems.

The council members, George Argyros, Gary Hunt and Thomas Sutton, who helped shape a proposed settlement plan for investors in the failed Orange County investment pool, said the bankruptcy represents an opportunity for county residents to reinvent county government and make it smaller and more efficient.

The county declared bankruptcy Dec. 6 after risky investments by then-Treasurer-Tax Collector Robert L. Citron lost nearly $1.7 billion belonging to the county and nearly 200 school districts, cities and other agencies.

"We're all mad about it, but we've got to move forward and solve it," said Argyros, a developer and chairman of Arnel & Affiliates, a Costa Mesa investment company. "It is a gigantic loss, and it won't come back."

The three business council members said that a half-cent sales tax increase would generate $600 million to $700 million over the next five years and provide "vitally important" money to help pay the county's debt, which is expected to reach $2 billion over the next fiscal year.

"If we don't do that (pass the half-cent sales tax increase), we won't be able to borrow in this county," Argyros said. "We have to save our county for the future."

Besides endorsing a half-cent sales tax increase, Argyros said county supervisors must look to trim the budget further than the $188 million in cuts already proposed by Chief Executive Officer William J. Popejoy.

Argyros said he believes some mandated programs could be cut without legislative approval from Sacramento, but he did not specify which ones.

"There needs to be some really hard cutting over there," Argyros said of mandated programs. "It's a time to review government, and I think we need to keep working on it."

The three business council members applauded the county supervisors' decision this week to endorse putting the controversial tax increase on the June 27 ballot.

Hunt, executive vice president of the Irvine Co., praised the supervisors' action and said the move represented "a very tough political choice."

"It shows to me prudent, decisive leadership," Hunt said.

Hunt said the campaign to get the sales tax increase approved by voters will cost $1.5 million to $2 million.

"If this fails, what we are saying is, 'We are not willing to step up to our word,' " Hunt said. He also said that the quality of life in Orange County would suffer if the tax is defeated.

Sutton, chief executive officer of Pacific Mutual Life, the largest life insurance company in the state, told the audience of about 250 at the Radisson Plaza Hotel that the sales tax is not the total solution to the financial crisis and said investors should get their money back.

"There's a lot of money (that) no one can say should not be repaid," Sutton said.

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