Developments Hearten Measure R Rivals : Campaigns: Both sides say legislative relief, insurance for recovery bonds and recent criminal charges help their positions.

As the county gathers momentum in its efforts to recover from the bankruptcy, those on both sides of the proposed half-cent sales-tax increase are contending that the milestones of recent days support their position in the debate.

Gov. Pete Wilson’s signature is etched on a legislative package to help Orange County regain its financial footing. County officials have secured insurance for $275 million in recovery bonds needed to pay back participants in the collapsed investment pool. And the district attorney’s office has obtained a guilty plea from the county’s former treasurer-tax collector and a criminal indictment against his ex-assistant.

So where does that leave Measure R, which goes before voters June 27 and would increase the sales tax by half a cent?

Measure R proponents say this week’s developments point out, more than ever, the need for a steady revenue stream to complete the county’s recovery plan and avoid default on $1 billion in debt coming due this summer.

“I think it will affect the debate in a positive way,” said Stu Mollrich, the political consultant coordinating the Yes on Measure R campaign.

“I think it will show that action is being taken to punish the people who caused this problem, that there is hope for resolving it, that we’re getting the tools to do the job. But one thing that I think it also shows is that with everything that’s happened, there is no additional money to pay this debt that we have.”

But Measure R opponents say that the legislative package signed last week by Gov. Wilson shows the county can regain solvency without raising taxes. The legislation makes it easier for the county to sell assets, resume selling bonds on Wall Street, borrow against delinquent property taxes and reap additional revenue by importing trash.

“They’re going to have trouble showing themselves as a hard-luck case if they’re able to raise funds like this,” said Bruce Whitaker, spokesman for the anti-tax Committees of Correspondence. “If you take the trash increase, if you sell some assets, if you get that large settlement out of Merrill Lynch, you really don’t need the tax.

“It’s a tightrope that they’re walking with their campaigning,” said Whitaker, who fielded questions from the Orange County Grand Jury on Wednesday about the proposed tax increase.

Mike Shepherd, an automobile dealer and one of the co-chairs of the No on Measure R Committee, said opponents of the sales tax have believed all along that the county’s crisis is overblown and that it should be solved by restructuring the way the county does business, not by raising taxes.

“The state’s package has really enabled us to make the hard decisions, and they’ve kind of thrown the ball in our court and said, ‘We’re going to untie your hands,’ ” Shepherd said. “So, it has made it harder for the proponents of the tax increase to say, ‘We can’t do this, and we can’t do this, and we can’t do this.’ They’ve taken away some excuses, and it makes it harder to avoid some of these tough decisions.”

County officials, however, warn against that logic. The developments of recent days are only part of the solution to the county’s dire crisis, they say.

“For a long time we heard that the Board [of Supervisors] has to do everything possible before people will be willing to pass a tax increase,” said Supervisor Marian Bergeson, who supports Measure R. “I think [the developments] show a commitment on the part of the board to move forward and get everything addressed. The missing link is the revenue stream that all this is predicated on.”

Paul Nussbaum, top adviser to county Chief Executive Officer William J. Popejoy, said Measure R is nothing short of the recovery plan’s “linchpin,” essential to staving off default on the county’s debt.

The insurance secured Monday from MBIA Insurance Corp. to back $275 million in recovery notes is also a bitter reminder of the county’s predicament, he added.

“The cost of that insurance is four times the normal cost of such an issuance,” he said. “Yes, it’s a milestone, but it’s a clear indication of the substantial premium to be paid while we are in bankruptcy.”