ORANGE COUNTY IN BANKRUPTCY : Supervisors Signal Preference for County Charter : Government: System would offer more latitude in appointments, privatization. Board also votes to let auditor-controller keep his job, but with 7.5% cut in pay.

Signaling a willingness to revamp Orange County government, the Board of Supervisors unanimously voted Tuesday to pursue drafting a county charter giving supervisors greater freedom to privatize services and make appointments to key offices.

“This is obviously a landmark option for Orange County,” Board Chairman Gaddi H. Vasquez said.

With the board’s backing, the Orange County Charter Commission will begin hosting a series of forums and debates to get public input on a “charter” government ballot measure that ultimately would go before the voters.

Orange County currently is a “general law” county governed by statutes approved by the Legislature. A charter county is one governed by statutes backed by county voters.

A charter government would allow the board to make appointments to positions that now are elected, such as the treasurer-tax collector and auditor-controller. County officials have blamed the elected officials in those positions for much of the county’s financial crisis.

In fact, some supervisors and the county chief executive officer tried to force Auditor-Controller Steve E. Lewis out of office but failed because he is an elected official who can only be impeached or recalled by the voters. That issue was resolved Tuesday night.

After a much-publicized standoff between Lewis and county officials, supervisors Tuesday reached a deal that allows Lewis to keep his job, but forces him to turn over his internal auditing responsibilities to other people within the county.

The deal passed 4 to 1 after Lewis agreed to cut his $104,582 annual salary by 7.5%. Supervisor Marian Bergeson voted against the deal, saying she thought “it sends the wrong message” by “rewarding someone who failed to do their job.”

Supervisor Jim Silva brokered the compromise on Lewis’ job status last week to break the stalemate between Lewis and County Chief Executive Officer William J. Popejoy. Popejoy and Supervisors Roger R. Stanton and Vasquez repeatedly have criticized Lewis for failing to detect and sound warnings over then-Treasurer-Tax Collector Robert L. Citron’s risky investment practices.

Under the plan, an internal auditing unit, independent of Lewis’ office, will take over his auditing responsibilities. Lewis still will be part of an oversight committee that will review the work of the 13-member unit. However, the new unit will report directly to the Board of Supervisors. For the most part, Lewis’ responsibilities will be confined to those of controller. Those duties include writing checks, balancing the county’s books, analyzing county budgets and other accounting functions.

Before the supervisors grappled with the charter government proposal and Lewis’ future Tuesday, some 40 opponents of the half-cent county sales tax hike rallied outside the Hall of Administration in what organizers had billed as the No on R campaign kick-off rally.

The assemblage, which listened to a variety of opponents from across the political spectrum, consisted almost entirely of the campaign’s organizers.

Bruce Whitaker, a No on R leader, said he was unconcerned about the turnout and that the rally would build momentum for the meeting next Wednesday in Orange of the Committees of Correspondence, the other principal umbrella group for opposition to the tax, which is on the ballot in a June 27 special election.

“I think we have solid support and it will reveal itself,” he said.

Whitaker said the Committees of Correspondence would fire the first shot in the campaign on Wednesday, with a 20,000-piece mailer. The flyer solicits a contribution and seeks volunteers.

The rally speakers--who included George Reis of the Libertarian Party, Jim Toledano, chairman of county Democrats, former GOP Assemblyman Gil Ferguson and former GOP Congressman Bill Dannemeyer, railed against the tax and the county’s leadership for pressing the tax as the only possible solution to the bankruptcy.

Whitaker also read off a list of state legislators who have signed on to oppose the tax. They are: Assembly members Doris Allen (R-Cypress), Mickey Conroy, (R-Orange) Jim Morrissey (R-Santa Ana), Bill Morrow (R-Oceanside) and Curt Pringle (R-Garden Grove), and Sens. John R. Lewis (R-Orange) and Rob Hurtt (R-Garden Grove).

Times staff writer Rene Lynch contributed to this story.