ORANGE COUNTY IN BANKRUPTCY : Group Says Its Plan Can Put O.C. in Black

A group that opposes Measure R said Wednesday that it has come up with a plan that would generate so much money it would save Orange County from bankruptcy and then have millions of dollars left over.

Citizens Against the Tax Increase urged voters at a news conference to reject the half-cent sales tax increase on Tuesday’s ballot and suggested alternatives that included selling assets, cutting costs and passing some city and school district taxes. The group also suggested that the county refuse to repay in full the cities and schools that lost millions when Orange County went bankrupt in December.

Some members suggested defaulting on bond debt.

The group claimed its blueprint for recovery could raise $4.8 billion--nearly three times the $1.7 billion lost in the county investment pool--and accused County Chief Executive William J. Popejoy and Measure R supporters of failing to do their jobs.

“We’ve got the Caped Crusaders running around trying to protect us from ourselves,” said Garden Grove City Councilman Mark Leyes, co-chairman of the group.

“But far from Batman and Robin, it’s Two-Face and the Riddler,” Leyes said, borrowing from the new hit movie “Batman Forever.”

Leyes said county officials backing Measure R earn the label “Two-Face” because they claim to want to end the bankruptcy but refuse to consider alternatives to a tax.

The group’s report was criticized by Sheriff Brad Gates, a Measure R supporter, who said many of the group’s proposals have already been rejected as unworkable.

Gates said the group’s members should tag themselves with the “Two-Face” label since they are supporting taxes--just as long as they affect someone else.

“I’m not sure who they represent. We haven’t had a single city or school say, ‘We don’t need the money,’ ” Gates said.

Group members readily admit that few of their ideas are original.

Along with advocating selling John Wayne Airport and diverting transportation tax funds, some members of the group said it’s time to start considering some more controversial options, including refusing to fully repay back cities, schools and other entities who lost millions in the investment pool.

Leyes and other group leaders would not be directly affected by their own proposals because they represent cities that did not invest with the county.

“That’s what makes this tax so unfair--why should Garden Grove pay for these losses?” he said.

Cities, schools and other investors should absorb the losses or raise taxes on a local basis, said Leyes.

Frank Greinke, who co-chairs the group, said he supports partial payments to bondholders and shrugged off concerns that defaulting would forever tarnish the county’s image.

“Why should Wall Street be treated any differently than Main Street?” said Greinke.

Leyes also had harsh words for Popejoy, a millionaire who is working free of charge, for not pursuing other avenues to get the county back on its feet.

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Critics’ Choice

Citizens Against the Tax Increase, an activist group opposing Measure R, has its own suggestions for bringing Orange County out of bankruptcy. Some of the recommendations:

* Reserve funds: Funds set aside for repayment of bonds are available and should be used.

* Debt forgiveness: Cities and special districts should forgive or substantially delay claim to final 11% of investments owed them.

* Secured claims: Cities and special districts should receive their portion of lawsuit proceeds when lawsuit is won or settled, not beforehand.

* County forgiveness: County should forgive or delay settlement claims.

* Lawsuit proceeds: If possible, settle lawsuits against Merrill Lynch and others involved in bankruptcy.

* Landfills: Sell county landfills, thereby allowing private operators to import trash and charge market rate.

* Airport: Sell John Wayne Airport for $225 million.

* Jails: Contract jails and correctional services.

* Real estate: Sell more of county’s assets.

Source: Citizens Against the Tax Increase