Legislators From 2 Counties Join Forces on Budget : Crises: Unlikely allies, L.A. and Orange hope to divert transit tax money to help them recover from financial woes. Union greatly improves their chances of success.

In a rare display of unity, Orange County conservatives are linking with Los Angeles Democrats to push a proposal that would allow both counties to divert transit tax money to help them recover from deep budgetary woes.

Orange County’s legislative delegation plans to latch onto a proposal floated this week by Los Angeles Democrats to take sales-tax money that now supports bus service to help solve Los Angeles County’s $1.2-billion budget deficit.

With their fates linked, the normally warring delegations from Los Angeles and Orange counties--which together represent nearly a third of the Legislature--can exert far more leverage.

“The reality is that if we want to move this and have the impact felt immediately, we need to build coalitions,” said state Sen. Richard Polanco (D-Los Angeles), a key backer of the plan.

The proposal could give Orange County as much as $70 million annually for 15 years to help it recover after suffering $1.7 billion in investment losses and declaring bankruptcy last year.

Los Angeles County would probably take about $75 million a year, but only for five years, officials said. Transportation agencies in both counties would be required to shift other transportation funds to replace those taken from bus services so riders would not feel the impact, legislators said.

“We think this is a good opportunity to bring about a solution for both L.A. and Orange counties,” Assemblyman Curt Pringle (R-Garden Grove) said Thursday.

Assemblyman Phil Isenberg (D-Sacramento) said unity among conservative and liberal lawmakers in the two counties would make approval of the tax-shift proposal seem likely.

“My hunch is, unless the budget involves some kind of relief for Los Angeles it is unlikely there will be enough votes to pass it initially,” Isenberg said, adding that the addition of financial help for bankrupt Orange County would only “improve its chances.”

Since Orange County’s Dec. 6 bankruptcy filing, leaders both inside and outside government have looked longingly at the Orange County Transportation Authority’s coffers, flush with about $340 million intended to build an urban light-rail system sometime in the future.

That money came from Measure M, a half-cent sales tax passed in 1990 for transportation improvements, and cannot be tapped without voter approval.

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Last week, county consultants presented a back-door plan to use Measure M funds by passing legislation that would take other sales tax money from the transit agency and ordering it to replace those funds with excess Measure M dollars. That is what legislators have jumped on.

“It’s a tremendous step in the right direction,” Orange County’s lead bankruptcy attorney, Bruce Bennett, said Thursday of the quick movement in Sacramento. “It doesn’t solve the problem in and of itself, but it’s a huge help.”

Los Angeles County lawmakers likewise have focused on tapping into county transportation funds to feed a yawning budget deficit, which has prompted proposals such as cutting health services to the poor and closing County-USC Medical Center.

Assemblyman Richard Katz (D-Sylmar), chairman of the Assembly Transportation Committee, said he favors limiting the tax shift to $75 million a year and slicing only from the mammoth Metropolitan Transportation Authority, preserving funding for the county’s 15 other bus agencies. Just as Orange County’s transportation agency would, the MTA would plug any revenue holes by diverting money from existing transportation sales tax money it controls.

In Sacramento, some lawmakers--even those who support relief for Los Angeles and Orange counties’ financial crises--expressed dismay over the last-minute proposal to take transportation taxes.

“It’s a startling policy change,” said state Sen. Quentin Kopp (I-San Francisco), chairman of the Senate Transportation Committee. “I don’t object to voting for it as far as those two counties are concerned, but it will set a bad precedent.”

Bailey reported from Sacramento and Wilgoren from Orange County.