Senate Gives Orange County a Boost : Finances: Upper house passes slate of bills to help in bankruptcy recovery. But officials expect tough sledding for measures in politically charged Assembly.

The state Senate approved a slate of bills Monday to help Orange County recover from bankruptcy and keep its investment debacle from recurring, but took the wind from the sails of a bill that would allow a state takeover of the county’s fiscal affairs.

On a series of lopsided votes, the Senate approved more than half a dozen recovery measures, including a key pair designed to help the county raise much-needed cash and more effectively tap Wall Street lenders.

The upper house also gave the nod to nine bills that would put a variety of new constraints on municipal investment practices.

“It was a good day for us in Sacramento,” said William Popejoy, Orange County chief executive officer.

While pleased with the legislative victories, Orange County officials were looking anxiously ahead to the tougher task of selling their recovery program in the Assembly. There, Speaker Willie Brown and other Democrats have shown themselves less than sympathetic to the county and voiced stern objections to parts of the county’s recovery plan.

The Assembly is also caught up in an escalating war over the speakership, and Orange County officials are worried that the recovery bills could get caught up in the intense partisan politics.

“We have much work to do there,” Popejoy said. “There seems to be a chance that we might unfortunately get caught in the cross-fire over some of the jockeying regarding the speakership. . . . And there seems to be a heightened animosity on the Assembly side to Orange County in general.”

Popejoy said defeat of the recovery measures in the Assembly would be “disastrous” for the county. “We would have to go back to square one,” he said. “It would very much damage, if not be fatal to, our recovery plan.”

While the Senate was amenable to the Orange County bills, there was one significant loser Monday. A measure authored by Sen. Lucy Killea (I-San Diego) that would allow the state to establish a three-member County Assistance Authority to shepherd the county’s recovery efforts failed to gain the two-thirds vote needed in the 40-member Senate to pass muster as an urgency measure.

That could prove to be a crucial defeat. Killea and others believe the assistance authority is an essential condition for the state stepping in to help Orange County should voters reject a half-penny sales tax hike on the June 27 ballot. Facing more than $1 billion in debt that comes due this summer, county officials consider passage of the sales tax initiative critical to their recovery efforts.

After removing the urgency clause, Killea managed to round up the 21 votes she needed to keep the bill alive and send it on to the Assembly. Without an urgency or emergency designation, the measure cannot take effect until 90 days after the close of the special legislative session on the Orange County bankruptcy.

Killea continued to express hope Monday that the urgency designation could be added in the Assembly.

“It’s a whole different ballgame over there,” she said. “I just want to be prepared for whatever happens. Without the urgency, it doesn’t have nearly the impact.”

Among the bills approved Monday were several measures by Sen. John Lewis (R-Orange) that are key parts of the county’s recovery plan.

One would allow the county to get a $60-million loan and raise $10 million annually by selling off its interest in delinquent property taxes and the penalty fees they incur. Another bill would allow the state to divert the county’s vehicle license fee revenues into a special intercept fund that could be used to collateralize more than $660 million in new loans deemed crucial to the recovery efforts.

A third bill by Lewis would allow the county to sell off its property and other assets more quickly by avoiding the fully public disposal process currently required.

Senate President Pro Tem Bill Lockyer (D-Hayward) characterized the recovery legislation as a way for the state to help “buttress the crumbling financial foundation” of Orange County without dipping into California’s own strapped coffers.

“We are all in the lifeboat together,” Lockyer said. “All Californians have to participate in finding solutions to our common problems.”

But a few senators expressed ire over the various recovery bills, suggesting that Orange County should not get favorable treatment that is not extended to all 58 California counties. They also suggested that predictions of doom by Wall Street investors are little more than hyperbole.

“We ought not be influenced by the self-serving prognostications of the Merrill Lynches of the world,” Sen. Steve Peace (D-Chula Vista) said, adding that doomsday predictions “ought to be taken with a tremendous grain of salt.”

Eager to prevent the debacle from being repeated in other California communities, the Senate approved measures that prohibit campaign contributions from Wall Street, allow counties to impose professional qualification standards for treasurers, establish oversight committees and require competitive bidding to select bond counsel, underwriters and financial advisers.

One of the closest votes came on a measure by Sen. Quentin Kopp (I-San Francisco) that would limit investments in reverse repurchase agreements, derivatives and other investments implicated in the Orange County crisis. Despite strong opposition from county and municipal treasurers, Kopp’s bill was approved on a 21-15 vote.