Legislature Gives O.C. Its Way, Approves Recovery Measures : Bankruptcy: Elated county officials say the five bills give them the tools they need to fix crash damage. A sixth, to turn supervisors’ fiscal powers over to state trustee, faces near-certain Wilson veto.

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, speed 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 deadlines. After losing $1.7 billion in investments and declaring bankruptcy last year, the county faces more than $1 billion in bond payments that come due this summer.

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

Supervisor Marian Bergeson reacted with glee to news of the legislative victory. “I think it is a red-letter day for Orange County,” she said, adding that state lawmakers “rose to the occasion. God bless them.”

“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.”

Supervisor Jim Silva added that the lawmakers recognized “we are in a crisis that calls for drastic measures and we need support to get through this.”

The county’s legislative package includes a trio of bills by Sen. John R. Lewis (R-Orange) that allow the county to borrow $60 million to be repaid over 20 years by delinquent property taxes, set aside vehicle license fees to help get $660 million in loans and speed the sale of county assets.

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

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While Orange County scored victories on the five bills it deemed central to its recovery efforts, the Legislature also sent to the desk of Gov. Pete Wilson a bill authored by Sen. Lucy Killea (I-San Diego) that would give a state trustee broad authority over the county’s fiscal affairs. The measure is roundly 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.”

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 and is expected to veto it.

“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 the governor’s desk anyway in the hopes she can persuade Wilson--a former colleague on the San Diego City Council--to have it ready in case Orange County voters reject Measure R, a proposed a half-cent sales tax hike on a special 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 that it includes provisions to use the incremental increase in county property taxes for the recovery effort if Measure R is rejected, a proposal that is opposed by Republicans because it would hit cities and special districts hard.

Bergeson brushed off the trustee bill as “a kind of a tweak, to keep the county on its toes. In my opinion, it will never be signed by the governor. Ultimately, it is doomed.”

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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 persuaded Senate President Pro Tem Bill Lockyer (D-Hayward) to hold up Craven’s bills in the Senate until the Assembly approved her trustee measure. That tactic prompted Assembly 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 Craven’s intercept measure, but she dropped the amendment after county officials convinced her it would upend the county’s recovery efforts.

As Killea played power politics, Brown was a picture of decorum on the Assembly side, a stance that contrasted sharply with the Speaker’s public admonitions of Orange County’s elected leaders in the weeks after it declared bankruptcy last December.

Some insiders speculated that Brown had pulled back in part because Ross Johnson, a former assemblyman who won a state Senate seat in a special election Tuesday, 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. Brown read the letter aloud to the full Assembly and offered kind words, although he ribbed the Republican for joining a bipartisan coalition that catapulted him in 1980 to the speakership.

Still, lawmakers on both sides of the aisle rejected the notion that Brown had sprung a deal. Sen. Quentin Kopp (I-San Francisco) said Senate leader 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 it was simply Brown and the Democrats finally 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.”

Assemblyman Richard Katz (D-Sylmar) said Democrats backed off because Popejoy and other Orange County officials, who had lobbied the bills heavily this week, convinced them any skulduggery would spoil Measure R’s chances for passage.

“I think the county was pretty convincing that it would make it harder for them to get the tax,” Katz said. “We figured we ought to get out of the way and let them solve their problem.”

Brown and other Democrats agreed 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.”

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Despite the respectful stance during floor debate, Brown couldn’t help taking one final shot afterward. Noting that opponents have dubbed Measure R “the Willie Brown sales tax,” the Speaker said that he has worked doggedly to help a county brimming with politicians who are his ideological opposite.

“I think the county ought to be abolished, frankly,” Brown growled. “That county is too good for the people who live there.”

Lockyer also suggested that state lawmakers had done their best to help, setting the stage for the battle over the half-penny sales tax increase.

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

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Orange County Bankruptcy Bills

The Legislature approved half a dozen measures Thursday intended to help Orange County recover from bankruptcy. Gov. Pete Wilson is expected to sign five of them by next week. The sixth, which proposes putting a state trustee in charge of Orange County’s financial affairs, faces a veto threat.

PROPERTY TAX (SB 7XX)

* Author: Sen. John R. Lewis (R-Orange)

* Vote: 55-1 in Assembly

* Effect: Lets county sell interest and penalty fees it normally collects for delinquent property taxes to a newly established joint powers authority. County could borrow up to $60 million and raise an additional $10 million a year.

TAX INTERCEPT (SB 8XX)

* Author: Lewis

* Vote: 54-1 in Assembly

* Effect: Allows state to set aside county vehicle license fees to pay off county’s anticipated recovery loans, thus assuaging concerns of Wall Street lenders. Would help county get upward of $660 million in loans.

ASSET SALES (SB 9XX)

* Author: Lewis

* Vote: 56-0 in Assembly

* Effect: Allows county to avoid current laws requiring full notification before selling property and other assets. Expected to raise about $100 million.

Note: Bills 7XX, 8XX and 9XX had already been approved in Senate.

Source: California Legislature; Researched by ERIC BAILEY / Los Angeles Times

STATE TRUSTEE (SB 10XX)

* Author: Sen. Lucy Killea (I-San Diego)

* Vote: 25-12 in Senate; 41-28 in Assembly

* Effect: Permits state to set up three-member assistance authority to oversee recovery efforts. Authority would appoint administrator to assume fiscal control of county for two years. Would allow county to finance recovery with incremental increases in property taxes.

IMPORTED TRASH (SB 17XX)

* Author: Sen. William A. Craven (R-Oceanside)

* Vote: 33-4 in Senate; 56-3 in Assembly

* Effect: Lets county avoid state environmental reviews normally required before it can start accepting trash from San Diego County and other regions running short of landfill space. Could generate $360 million in onetime revenue.

STATUTORY LIEN/INTERCEPT (SB 18XX)

* Author: Craven

* Vote: 37-0 in Senate; 61-1 in Assembly

* Effect: Allows state to set aside vehicle license fees to pay for loans. Also would create a bankruptcy-proof “statutory lien” on $236 million in recovery notes the county has promised local governments with money in its toppled investment pool. Would require county to pay off notes if it declared bankruptcy again.