O.C.’s Schools, Cities Scolded for Tax Stance

On the eve of a decisive board vote over raising local sales taxes, Orange County supervisors on Monday searched for alternate ways to solve the county’s bankruptcy woes and complained that school boards and city councils were withholding critically needed political support for the tax hike.

County officials who hope to see the tax proposal approved at tonight’s board meeting said they are worried that they might be at least one vote short of the four needed to place the half-cent sales tax hike on the ballot for voter ratification in a special June 27 election.

“We’re very concerned about it,” said Paul Nussbaum, an adviser to William J. Popejoy, the county’s chief executive officer, who predicts the county is destined for economic “meltdown” and takeover by a state-appointed trustee if the tax increase is not approved.

Until Popejoy warned them that a tax increase was unavoidable, the supervisors had all voiced opposition to raising taxes as a way of bailing out the county. Anti-tax groups have been pressuring the supervisors to reject the tax hike, and say that reversals of any board members’ earlier stance will unleash a flurry of recall efforts.

According to county insiders, Board Chairman Gaddi H. Vasquez and Supervisors William G. Steiner and Marian Bergeson will vote tonight in favor of placing the measure--entitled Measure R--on the special June ballot. The measure calls for the sales tax, currently 7.75%, to be raised a half-cent for 10 years.

On Monday, Orange County Sheriff Brad Gates and Dist. Atty. Michael R. Capizzi made the rounds, urging supervisors to support the tax hike.

Supervisors Roger R. Stanton and Jim Silva have been the most vocal opponents of the proposed tax increase, and sources said the pair might back away from the tentative support they offered one week ago.

At last week’s board meeting, Stanton said he could not support a tax hike, but would go along with putting the matter before voters.

On Monday, he continued to criticize the proposed tax increase, calling it “reprehensible” but probably an “unfortunate reality.”

Stanton was also looking for ways to increase revenue without the tax, asking the Orange County Transportation Authority if it would be possible to tap into sales-tax revenue earmarked for OCTA construction projects, or to soften the impact of a bankruptcy-related tax increase by decreasing the half-cent tax adopted for highway and major road improvements.

One OCTA official suggested looking into the feasibility of lending the county money, but an OCTA staff memo indicates that any maneuvers with Measure M money would be difficult if not impossible.

“It seems to me,” Stanton said after the OCTA meeting, “that we’re talking about paying for (transportation) studies here and there, and . . . we should be concerned about county financing for education and public safety.”

Silva, meanwhile, said he has been meeting with cities in his supervisorial district and that the mood is overwhelmingly against a tax increase. Silva said he would like to see more cities and school boards supporting the measure before he decides to do so. He predicted he would not make up his mind on the vote until late tonight.

“It’s kind of hard to help people who don’t want the help.”

Orange County declared bankruptcy Dec. 6 after learning that risky investments by former Treasurer-Tax Collector Robert L. Citron had resulted in a $1.7-billion loss to the county’s investment pool and that the county had effectively run out of money.

Steiner said Monday that he is dismayed at the attitudes of many school trustees, city council members and others who are demanding a 100% return of the money they had deposited in the county’s investment pool but have refused county appeals to support the tax hike needed to pay them back.

Instead, Steiner said, the districts are leaving the supervisors to “fall on our swords.”

Popejoy sent letters to school trustees, city officials and other groups in recent weeks, asking them to support placing Measure R on the ballot. Most have refused, Steiner said.

“They can’t have it both ways,” Steiner said. “They have the most at stake. They have more at stake than we do.”

Sen. Quentin L. Kopp (I-San Francisco), a member of the state Senate’s Special Committee on Local Government Investments, which is investigating the Orange County bankruptcy, said he wants to see the county supervisors solidly support the tax hike if they expect any help from Sacramento.

“They’re going to have to stew in their own juices,” Kopp said. “There is no way I will vote for authorizing money in any way without an assured source of Orange County revenue. Putting it on the ballot is relatively easy. They have to show vocal support for it,” he said.

“If they think they are going to slide, they’re mistaken, especially those incumbents,” he said, referring to the three supervisors--Vasquez, Stanton and Steiner--who were in office when the investment pool collapsed.

Sen. Lucy Killea (I-San Diego), co-chair of the Senate committee, has likewise said the supervisors must get behind the tax increase and tell the public that “this is what we’ve decided must be done” instead of “passing the buck.”

But Steiner said Monday that many Orange County residents are so angry and skeptical of county government that they might not be willing to support a measure backed by the supervisors. Support at the city and school level is critical, he said.

“The success or failure of the vote on the tax increase is not going to depend on the county supervisors leading the way,” Steiner said. “It’s going to take the entire community at a grass-roots level for this to pass.”

But many critics say some of the supervisors are also trying to have it both ways and are asking the public to do what the board will not.

Vasquez, for example, last week called the bankruptcy a “crisis of epic proportions” and supported placing the tax hike on the ballot. But Vasquez stopped short of endorsing the tax increase or encouraging voters to support it.

Aides to the supervisor have tried to downplay tonight’s vote as a vote for taxes and instead have attempted to portray it as a decision by the board to let the public decide. But the state’s election and taxation code states that the tax hike must be approved both by the board and the public.

Bergeson and Steiner say they will not throw their support behind the tax until they are convinced there are no other options. Bergeson and Steiner say they will campaign for the measure, but Steiner insists he must be assured of local support before he does so.

“If a new sales tax proves to be the best alternative to the continuation of the county’s bankruptcy, I will actively campaign for such a measure--to not do so is an abrogation of my elected responsibility,” Bergeson said.

William R. Mitchell, president of Orange County Common Cause, said most of the supervisors are having trouble seeing beyond their political futures.

“This whole exercise causes one to question the utility of a Board of Supervisors,” Mitchell said with a sigh. “It’s very difficult if not impossible for the public to believe the need for a tax when county leaders are opposing it.”

John M.W. Moorlach, the county’s new treasurer, said that as a conservative he sees the board’s dilemma: “It’s soul-searching time.”

It remains to be seen what support Measure R would receive if it goes on the ballot. Janet Huston, executive director of the Orange County Division of the League of California Cities, for example, said her group has not taken a formal stance on the issue but is concerned that Orange County hasn’t ruled out all its other options.

Meanwhile, the Committees of Correspondence, a vocal anti-tax group, is gearing up to fight any tax increase and has called for a demonstration at the Hall of Administration just before tonight’s board meeting.

Times staff writer David Reyes contributed to this story.

* SETTLEMENT EXPLAINED: Legal-financial team tells agencies what they’ll get. A14

* LEGISLATORS UNHAPPY: County delegation expresses worries about recovery. A14