Cities Set Price if They Must Pay in Bailout

TUSTIN — Worried that the financial woes of Orange County government could be settled at their expense, leaders of nearly every city in the county unanimously agreed Friday to fight attempts to divert or extract revenue from the cities for the county’s benefit.

But if cities are made to help with the bailout, their elected officials say, they are determined to see that the cuts are as painless as possible and that they have a say in restructuring county government to make it more effective and responsible.

During Friday’s special meeting at Tustin City Hall, 80 municipal officials from 27 cities began to sketch out an alternative government plan that would limit the power of the Orange County Board of Supervisors and increase the role of a chief executive officer to run the county on a daily basis.

Kenneth Emanuels, Sacramento lobbyist for the League of California Cities, told a hastily convened meeting of the league’s Orange County division Friday that cities must quickly respond to the Orange County legislative delegation’s new proposal for resolving the county’s bankruptcy, which calls for cities and special districts to swallow $749 million of the county’s investment pool losses.

“We have to assume there will be tremendous pressure on our delegation to adopt a plan,” Emanuels said. He predicted that whatever the local delegation proposes will be enacted by the rest of the state Legislature, possibly as soon as mid-August.

“If the cities don’t go to Sacramento and get involved in the solution for the bankruptcy problem and restructuring of Orange County governance, they will do it for us,” said league president Charles V. Smith, mayor of Westminster. Smith said a select group of city managers, city attorneys and finance directors will fly to Sacramento on Wednesday. They plan to huddle with the staffs of Orange County legislators to determine how the proposal would affect the operation of local government and local services.

The league agreed to ask that Gov. Pete Wilson or the Legislature authorize the department of finance or another state agency to verify the size of the county’s financial shortfall so the cities will know exactly how much help is needed. Such an accounting would be “a logical intermediary step to imposing a trustee,” according to a league resolution approved Friday. “A lack of access to comprehensive, factual information has been a primary obstacle to cities being full and meaningful participants in recovery discussions to date,” the resolution continued.

League Executive Director Janet Huston said the cities are anxious to get an outside accounting because they don’t believe county estimates.

“The numbers at this point are unreliable” and there is suspicion that county officials “are deliberately underestimating their revenues and inflating their debt,” she said.

Smith also questioned the credibility of the county and complained that past efforts by the cities to help the county design a recovery plan had been rejected. “We were stonewalled,” he said.

The Westminster mayor said that Orange County cities already have cut their budgets “to the bone” to accommodate other state appropriations of local revenue in recent years and he warned that, if the cities are required to relinquish more funding, such vital public services as police and fire protection could be placed in jeopardy.

“We are not willing to agree to giving up anything without considering the impact on the people being asked to give things up,” Smith said. State legislators “are still looking at the cities like we are the pot of gold at the end of the rainbow.”

Emanuels advised the cities, however, that if they move quickly before the Legislature acts on the delegation’s proposal, they can gain some advantage from their role in the bankruptcy resolution.

“We have a fair amount of leverage over the next six weeks,” he said. Emanuels said state lawmakers are very interested in restructuring the county government and he urged the league to take the lead in proposing a plan.

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As a first step toward drawing up a restructuring plan, the league on Friday adopted a set of preferences for changing county government through a charter. They voted in favor of increasing the size of the five-member Board of Supervisors, although they did not settle on a number for an expanded board, which they hope would improve accountability to residents.

The number of supervisors and new district boundaries would be established by “an independent body removed from political influence and conflicts of interest.”

The majority of league members also agreed that:

* The role of the Board of Supervisors should be restricted to setting policy, adopting budgets and hiring and firing the chief executive officer.

* The chief executive officer would be given responsibility for implementing board policy and administering day-to-day operations of county government.

* Supervisors’ compensation should be “adjusted,” in recognition of the lessening of the supervisors’ responsibilities and workload. The league strongly implied a salary cut.

* The supervisors’ administrative staff be placed under the CEO, who would appoint all county officials with the exception of the sheriff, district attorney and assessor. All county officials would report directly to the chief executive.

And they voted that “Any charter should contain requirements for regular financial reporting and other basic financial policies.”