Legislature OKs Package of Bills to Aid Orange County

Despite a few last-minute political bumps, the Legislature resoundingly approved half a dozen bills Thursday that Orange County officials say give them the tools needed to pull the county out of the worst municipal bankruptcy in U.S. history.

In a dizzying series of votes as bills shuttled between the two houses, the Assembly and Senate passed measures designed to make it easier for the county to resume selling bonds on Wall Street, borrow against delinquent property taxes, accelerate the sale of assets and reap additional revenue by importing trash from other counties.

“We’re delighted,” County Chief Executive Officer William J. Popejoy said afterward. “It was a roller-coaster week where at times it looked like the package might be derailed. . . . Now I hope the message to the county is, ‘Solve your own problem, stop whining and start working.’ We now have the wherewithal.”

County officials had been pushing to get the legislative package approved quickly because of looming debt payment deadlines. After losing $1.7 billion on its investments and seeking bankruptcy protection last year, the county faces more than $1 billion in bond payments this summer.

The measures proposed by Orange County’s elected leaders, however, drew harsh reviews from Democrats. Until the last minute, county officials were expressing worries that partisan squabbles in the sharply divided Assembly could sabotage the legislation.

“I am really pleased that the partisan differences were put aside,” Supervisor William G. Steiner said. “I am especially pleased that the Legislature sees it is to the state’s best interest to come to a solution, that this is not just an Orange County problem.”

The county’s legislative package includes a trio of bills by Sen. John Lewis (R-Orange). One allows the county to borrow $60 million over 20 years to be repaid from delinquent property taxes. Another sets aside enough money from vehicle license fees paid by county residents to repay $660 million in new loans over 20 years. The third would accelerate the sale of county assets.

Sen. William A. Craven (R-Oceanside) carried two other bills: another so-called intercept measure and a bill allowing the county to avoid environmental reviews before taking trash from other counties, which is expected to produce more than $50 million in annual revenue.

Although Orange County scored victories on the five bills it deemed central to its recovery efforts, the Legislature also sent to Gov. Pete Wilson’s desk a bill by Sen. Lucy Killea (I-San Diego) that would give a state trustee broad authority over the county’s fiscal affairs. The measure is opposed by the County Board of Supervisors, which would be stripped of its financial powers, and the county’s Sacramento delegation.

“You don’t want to start having czars in charge of counties,” Assemblywoman Doris Allen (R-Cypress) argued during debate on the floor. “This is a major step in that scheme. Don’t let this Orange County debacle panic you. (Killea’s bill) is in no way going to solve our problems.”

Wilson has promised to sign the package of bills favored by Orange County, probably sometime next week, but has voiced stern opposition to Killea’s trustee bill, which he is expected to veto.

“We’re not enthusiastic about Sen. Killea’s bill,” said Sean Walsh, Wilson’s spokesman. “We never say never until the governor reviews a measure, but it’s not likely he’d sign it.”

Killea’s bill was the only one approved Thursday that did not carry an urgency clause making it law upon the governor’s signature, meaning it would go into effect long after the county’s fiscal crisis hits its next peak this summer.

But Killea said she wanted to push the measure to Wilson’s desk anyway in the hopes she can persuade the governor--a former colleague on the San Diego City Council--to have it at the ready in case Orange County voters reject Measure R, a proposed half-cent sales tax increase on the June 27 ballot.

Killea said the Legislature, if faced again this summer with demands for help from Orange County, could swiftly pass an urgency provision making the trustee bill take effect immediately.

“I think we have to follow this all the way through and come up with a way to keep Orange County from taking the rest of us down,” said Killea, echoing the sentiments of Wall Street bankers who believe municipal credit ratings would suffer up and down the state if the county defaulted on its debts.

Killea also amended the bill so it includes provisions to apply future increases in county property tax revenue to the recovery effort if Measure R is rejected, a proposal opposed by Republicans because it would hit cities and special districts hard.

Though Orange County officials have long feared that Assembly Speaker Willie Brown and other Democrats could stand in the way of the county’s recovery package, it was Killea who proved to be the biggest obstacle.

She convinced Senate President Pro Tem Bill Lockyer to hold up a key pair of measures in the Senate until the Assembly approved her bill, a tactic that prompted GOP leaders to push three moderate Republicans to join with Democrats to propel the trustee measure out of the lower house.

“Most of us don’t like it, but we know the ultimate landing location for that bill will be the governor’s desk,” said Assembly GOP Leader Jim Brulte (R-Rancho Cucamonga). “We’re confident he’ll do the right thing.”

Killea also briefly launched a behind-the-scenes effort to alter a measure by Craven designed to sweeten the county’s recovery package on Wall Street by ensuring that the portion of vehicle license fees due Orange County is retained by the state to help pay off bonds.

She dropped the amendment after county officials convinced her it would scuttle the bill and upend the county’s recovery package.

As Killea was playing power politics, Brown was a virtual picture of cooperation and decorum on the Assembly side, a stance that contrasted sharply with the Speaker’s public admonitions of the county’s elected leaders in the weeks after their retreat into bankruptcy court last December.

Some insiders speculated that Brown had pulled back in part because Assemblyman Ross Johnson (R-Placentia), who won a Senate seat in a special election Tuesday, had promised to resign his Assembly post as soon as the Orange County bills cleared the lower house, thereby strengthening Brown’s hold on the speakership.

True to his word, Johnson strode to the podium seconds after the last Orange County bill was approved and handed Brown his resignation letter.

Still, lawmakers on both sides of the aisle rejected the notion that Brown had sprung a deal. Sen. Quentin Kopp (I-San Francisco) said Lockyer had been a steadying influence on Brown and other Assembly Democrats. He also suggested that Brown, who is widely expected to run for San Francisco mayor this year, has his mind elsewhere.

Others suggested that Brown and the Democrats simply were doing the right thing.

“The Speaker understands the use of rhetoric,” said Assemblyman Mickey Conroy (R-Orange). “But he also understands what’s best for the people of California. He had his fun, but he understands what needs to be done and he did it.”

Brown and other Democrats said the onus now is on Orange County voters to approve Measure R.

“The business of whether or not Orange County survives depends upon that tax measure,” Brown said. “And if that tax measure goes down, Orange County is in the soup.”

Times staff writers Carl Ingram in Sacramento and Peter M. Warren in Orange County contributed to this report.

* SEC PROBE: U.S. agency subpoenas a dozen Orange County officials. A3