Silva Wants Vote on Using Measure M Funds as Bailout

County Supervisor Jim Silva said Wednesday that he wants to settle a debate over using Measure M transportation tax funds for bankruptcy relief by letting voters decide whether to divert nearly $340 million from a light-rail commuter project.

“Our goal is to get an amendment to Measure M on the March primary ballot,” said Silva, who is working with state Sen. Rob Hurtt (R-Garden Grove) and other state legislators to craft the ballot measure. “Let’s put an end to the debate by letting voters decide what to do with their tax money.”

The measure, still in the development stages, would use Measure M funds to pay back millions in bond debt, Silva said.

The county has been scrambling for new revenue sources since it declared bankruptcy Dec. 6 after a losing nearly $1.7 billion on a risky investment strategy. A proposed half-cent sales tax increase failed at the polls last week, and attention has once again focused on Measure M money.

But transportation officials continue to question whether it is legal or feasible to divert transportation funds for non-transportation purposes.

“There are extreme difficulties and obstacles to doing that,” said Charles V. Smith, chairman of the Board of Directors of the Orange County Transportation Authority. “It may be possible, but it’s not the magic wand that everyone seems to think it is.”

Smith said he fears that tampering with Measure M funds could result in OCTA defaulting on $700 million in bonds it sold based on projected Measure M revenue. It also could have an impact on current transportation projects. “I’d hate to see those projects come to a screeching halt,” he said.

But Hurtt called such comments “scare tactics.” He said he believes OCTA can afford to give up rail transportation funds while also paying back all bond debt.

“Where there’s a will there’s away,” Hurtt said. “The obstacles are being put up by the OCTA.”

The transportation agency is currently studying the need for a light-rail commuter system. An estimated $340 million has been earmarked to attract the state and federal matching funds needed to make a proposed project a reality, said OCTA head Stan Oftelie.

Hurtt and Silva both question the need for a costly light-rail project that they say will be subsidized by the taxpayers and is likely to attract few riders.

Measure M, the half-cent sales tax increase approved by county voters in 1990, is expected to raise $3.1 billion during its 20-year life.

Meanwhile, Board of Supervisors Chairman Gaddi H. Vasquez and Supervisor Marian Bergeson dispatched a letter to state leaders, asking them to hold off any action on the bankruptcy until the Legislature returns in mid-August for its final month in session.

The pair said the county needs the “grace period” to prepare an alternative recovery plan. They said the county would be happy to participate in a joint legislative hearing on their plan, which they anticipate will require the assistance of state lawmakers on issues such as a relief from state mandates that remain unfunded or underfinanced.

State Finance Director Russell Gould, who participated Wednesday morning in a conference call with noteholders, said Gov. Pete Wilson believes the county must meet its debt obligation, can solve its problems locally and must come up with solutions within the next few weeks, according to H.D. Palmer, Gould’s spokesman.

Times staff writers Eric Bailey and Matt Lait contributed to this report.