ORANGE COUNTY IN BANKRUPTCY : Bergeson Proposal Sparks Interest : Recovery: Lawmakers in both parties say shifting county responsibilities to cities and state might be an idea whose time has come, and that bankrupt O.C. might be the place to test it.

State lawmakers in both parties reacted with cautious optimism Thursday to a proposal by Orange County Supervisor Marian Bergeson to cut the cost of county government by shifting most of its responsibilities to the cities or state.

Bergeson’s proposal, which she contends could save Orange County $140 million a year, mirrors a concept that has long been debated for all 58 of California’s counties and currently is under review by a state constitutional revision committee.

Several lawmakers suggested that Orange County, given its fiscal problems in the aftermath of $1.7 billion in investment losses last year, could be a good proving ground for the idea.

“It’s real interesting,” said Assemblyman Richard Katz (D-Sylmar). “I think she’s raising the right question--have counties outlived their usefulness. . . . I think it’s an idea that has merit. And Orange County could be the test case.”

Sen. Rob Hurtt (R-Garden Grove) also gave an enthusiastic thumbs up to the plan, saying that urban counties such as Orange County have “outlived their purpose” to provide services to far-flung residents well removed from cities. The biggest roadblock, Hurtt predicted, will be from bureaucrats who would lose their jobs if counties were eliminated.

“Those kind of basic restructurings are worth review,” said Sen. Bill Lockyer (D-Hayward), the Senate leader. “It probably deserves some consideration both with respect to Orange County and more universally.”

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While lawmakers were optimistic, the proposal met with harsh criticism from the California State Assn. of Counties, the umbrella group for the state’s county governments.

“It might save $140 million, but it would probably cost the cities and state $160 million to do it,” said Daniel Wall, a lobbyist for the association. “I just think this notion of abolishing county government is a simplistic solution to a complex problem.”

Wall said the “fundamental question” is who would take over county responsibilities. “Neither the state nor the cities have been very excited about coming forward to help us with our burden,” Wall said. “I’m a little curious why they’d now be interested in deviating from the status quo.”

He also speculated that Bergeson’s idea is a direct reaction to a bill by Sen. Lucy Killea (I-San Diego) that would impose a trustee to run Orange County’s fiscal affairs in the aftermath of the bankruptcy.

The state’s Constitution Revision Commission, which has been meeting monthly since 1993 and plans to present a report to the Legislature this summer, will discuss the overlap of local, county and state governments at a meeting in Sacramento today. Commission Executive Secretary Fred Silva said the issue is less whether to abolish the current county institution than what to do with the county’s duties.

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California’s Constitution set up counties as agents of the state--their main responsibility is to administer state-mandated programs such as criminal justice and welfare. But counties also have picked up community-oriented services such as waste management, water and planning, and often overlap services provided by cities.

Silva suggested an overall restructuring--similar to the Bergeson proposal--in which community services are taken care of by cities, state-required programs are sent back to Sacramento and regional problems are handled by new regional authorities organized based on common needs and interests.

Leon Williams, a former San Diego County supervisor and former president of the California State Assn. of Counties who also sits on the Constitutional Revision Commission, said he remains unconvinced that counties have outlived their usefulness.

“California is the size of Great Britain, or bigger,” he said. “Many of our counties are bigger than many states. You try to run that out of Sacramento, and you would have, I suspect, more problems than we have now.”

Not all agreed.

Kenneth Kraemer, a professor at the UC Irvine’s Graduate School of Management, applauded Bergeson’s plan as innovative.

“It’s the only thing I’ve seen coming out of (the county) that really makes sense,” he said. “It would be an interesting model for the rest of the country.”

The proposal, Kraemer said, is a good compromise because it keeps critical and truly regional services, such as transportation and health care, in the hands of a regional authority.

“It really gets rid of the duplication,” said Kraemer, who faulted the plan only for suggesting that the Sheriff’s Department continues to exist.

“I like the idea of the mayor replacing the supervisors,” he said. “I personally believe that we’ve seen a maximum potential for abuse with five people. One person can’t do any more abuse than the five have done. One person can’t intimidate the whole bureaucracy.”

Times staff writers Jodi Wilgoren and Lee Romney also contributed to this story.