ORANGE COUNTY IN BANKRUPTCY : State Will Take Over County’s Funds if It Defaults, Fong Warns
State Treasurer Matt Fong warned Thursday that if Orange County defaults on its debts as a result of the bankruptcy, the state could take over county government operations such as transportation and sewage and water agencies.
“If Orange County does not solve its problems and the taxpayers do not solve the problems . . . (and) if you do in fact suffer a default and Orange County comes to the state for help . . . I can foresee not only the state taking property taxes away from you, I see it taking everything--transit money, water, sewage, you name it,” Fong told officials at a general meeting of the Orange County Division of the League of California Cities.
“It is a $1.7-billion bill,” Fong said of the county’s bond payments due this summer. “It’s not going to disappear. It’s going to have to be paid.”’
Defaulting on the payment is not an option, Fong repeatedly said. He encouraged local cities’ officials to work together to come up with any plan to repay its debt.
“Do what you think you have to do to advise your voters to not to default,” the treasurer said. “If you don’t like Measure R (an initiative that would raise the sales tax half a cent), come up with something yourself.”
Fong warned officials that the county is running out of time.
“There is a cash-flow crunch,” he said. “You need things that will bring in cash now.”
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