ORANGE COUNTY IN BANKRUPTCY : Tax Hike Allies Think They Can Win Over Voters

Given Orange County’s long history of tilting at taxes, the half-cent increase that the Board of Supervisors continued to debate late into the wee hours Wednesday seems to face long odds.

In a 1991 special election, the county’s conservative voters roundly rejected a proposed half-cent increase in the sales tax to build a jail. And a ballot measure to increase the sales tax for transportation projects failed twice in the 1980s, barely sliding by in 1990, and then only after it was repackaged and put on the high-turnout November ballot.

But such historical precedents haven’t stopped some upbeat pundits from predicting that Measure R, as the new half-cent hike has been dubbed, could face rosier prospects than conventional wisdom might dictate.

With opinion polls indicating public sentiment evenly divided, boosters of Measure R say they can sell the new tax.

Most insiders predict the sales technique will borrow heavily from the successful Measure M campaign of 1990. To win public approval then, proponents identified transportation projects that would spring up in every corner of the county, a hook that lured the support of traffic-weary commuters.

But instead of dangling the prospect of new roads and bridges, Measure R proponents would spotlight exactly what county residents could lose if voters reject raising the sales tax from 7.75% to 8.25% and Orange County’s fiscal house of cards collapses.

Most notably, proponents are expected to focus on how schools could be hurt to woo voters needed to offset the assortment of elderly and archconservative voters who typically turn out for a special election.

“I would bet big money on a sales tax increase passing,” said Reed Royalty, who chaired the successful Measure M campaign. “It seems to be running well now, and that’s even before anyone has been subjected to a campaign, which I’m sure would be very effective.”

And very costly. Political consultants are pegging the price of a Measure R victory at somewhere in excess of $2 million, with most of the money to be put up by well-heeled proponents such as the Irvine Co., businessman George Argyros and Wall Street firms that stand to lose if the county goes south.

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On the other side, a hardy band of opponents--many of them veterans of the Measure M wars--has already begun to form.

“I think it goes down the tubes,” said Tom Rogers, a San Juan Capistrano rancher and longtime critic of Orange County supervisors, who opposes the new tax hike. “Two million dollars is tipping money when it comes to what’s at stake for the corporations. But I think if we can get $100,000 we can beat them.”

Rogers sees serious flaws in the new tax proposal. He predicts that voters won’t embrace it once they realize that big business is throwing its weight around to win an increase in the levy. He also suggested the supervisors themselves could be a liability.

“People aren’t going to accept a tax increase if it goes to the same establishment that caused the problem,” Rogers said.

In political circles, that’s not a unique sentiment. Harvey Englander, a Huntington Beach political consultant, rates voter approval of the tax increase as a long shot, but suggests its chances might improve if the supervisors “fell on their swords” and resigned.

“People are afraid to put money back in their hands,” he said.

Englander also said the county currently lacks any leaders with the cachet and unblemished record needed to champion the tax increase.

“Unfortunately, everyone who seems to have a position on this issue has an ulterior motive or has been involved in something that has hurt their image,” he said. “There’s not a Walt Disney or Walter Knott there to carry the banner. Peter Ueberroth comes as close as there is now, but he’s busy with other things.”

Mark Baldassare, a UC Irvine professor of urban planning, said he expects the tax vote to be close.

“It’s a matter of whether or not the voters perceive this tax increase as absolutely necessary to maintain the quality of their lives,” he said. “If there’s any indication that there’s other alternatives out there, then it’s going to be very difficult.”

Rogers and other opponents say alternatives are right in front of the county’s nose. They contend the county should tap into the Measure M sales tax, diverting money planned for rail projects to help recover from bankruptcy. Rogers estimates the county could reap upward of $700 million, money that would go a long way toward a bailout.

He said the rail projects were added to the list during the 1990 campaign by Measure M backers as a “political ploy” to attract more votes.

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“We’ve gotten along fine without high-tech rail. Let’s set it aside,” he said.

Even some Measure M boosters agree.

“I doubt that many tears would be shed if that portion of Measure M devoted to urban rail was diverted,” Royalty said. “I don’t think there would be an outcry if we put it on hold so we could avoid a new tax.”

But officials at the Orange County Transportation Authority, which oversees the Measure M program, chafe at the notion of a raid on the $3.1-billion transportation program. Monte Ward, special projects manager at OCTA, said “significant obstacles” loom to using Measure M money to recover from the bankruptcy.

Ward said the measure was written to ensure the money would be spent on transportation. State law would have to be rewritten and any raid on the funds would need the approval of the OCTA board as well as the Measure M citizens oversight committee.

Moreover, $742 million in bonds have already been sold, all of them tied to a promise the tax revenue would be available. Shifting the money to other uses might involve defaulting on those bonds, a question the agency has asked its bond counsel to investigate. And any changes would almost certainly have to go to the voters, Ward said.

On top of all that, a slew of transportation projects would be left unfinished, among them the completion of the Santa Ana Freeway widening north into Anaheim; the reconfiguration of the El Toro “Y”; construction of car-pool lanes along the freeway in South County and widening projects on several other freeways.

Even if voters are convinced that tapping Measure M isn’t an option, the mechanics of a special election remain a problem for proponents of the bankruptcy tax.

The last time Orange County held a special election on a sales tax increase, only 17% of the voters turned out. That was for Measure J, the unsuccessful ballot measure that proposed a half-cent sales tax boost for construction of a new jail. It lost by a 3-to-1 ratio in May, 1991.

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Proponents of Measure J, most notably Sheriff Brad Gates, chalked up the lopsided defeat to voter confusion about what they would get for their money, and a poor economic climate. But most political insiders say the tiny turnout was the biggest factor, putting the decision into the hands of only the county’s most fiscally conservative voters.

“There are a certain number of people in Orange County who are closet libertarians and are opposed to government and taxation in any way, shape or form,” said Dana Reed, a Newport Beach attorney who backed the Measure M campaign. “They would turn out and vote even if the polls were open from midnight to 3 a.m. Their voices are great in a special election.”

Baldassare, however, predicts that a Measure R election could draw a big turnout because of the high degree of voter interest in the county’s bankruptcy recovery efforts.

Presidential politics also could come into play. Gov. Pete Wilson’s foray into the 1996 GOP race--and the likelihood that his opponents will point to the Orange County debacle as a black eye--could prompt the governor to step in.

“This is a crisis in his back yard and I can only assume he will actively support whatever plan is put together,” said Reed, a Wilson supporter. “If he can’t find the money in the state budget, at least he can put his prestige as governor on the line and help us resolve these problems. It’s inconceivable to me that he would remain neutral and simply walk away from this.”

Others note that some recent history bodes well for the chances Orange County voters would begrudgingly accept a tax if persuaded it is for the good of their county.