Transit Officials Say O.C. Bus Bill Is a ‘Disaster’

Orange County road projects will be endangered and bus service virtually halted--forcing layoffs of hundreds of transit workers--under the Legislature’s midnight deal to let the bankrupt county raid $1 billion in transportation agency funds, county officials said Sunday.

“This is just a disaster for Orange County,” said Charles V. Smith, the chairman of the Orange County Transportation Authority. “The worst part about this is the human impact: People who depend on buses to get back and forth to work would be hit the hardest.”

Each day, more than 50,000 county residents, many of them lower-income workers, rely on OCTA buses to take them to their jobs on any of 67 routes throughout the county.

“It essentially eliminates public transportation in Orange County,” OCTA Chief Executive Officer Stan Oftelie said. If the diverted funds are not replaced, he warned, OCTA will be forced to operate a bus system only 10% to 17% of its current size.

To have enough cash to operate “some semblance of a bus system,” Oftelie said, the county also may have to stop work on a major portion of its freeway expansion program.

“You don’t solve a bankruptcy problem by creating a new problem,” said Orange County Supervisor William G. Steiner, who also serves as vice chairman of OCTA. The tax shift “would shut down our bus system and jeopardize existing transportation projects,” he added.

However, Assemblyman Curt Pringle (R-Garden Grove) and others who support taking OCTA funds argue that the transit agency has enough revenue to help the county without jeopardizing its projects and operations.

“This is a stream of revenue the county needs to pay back its debts,” Pringle said.

Garden Grove City Councilman Mark Leyes said that if OCTA has enough money to seek to purchase John Wayne Airport, “obviously they have the surplus” to help the county.

He believes the worst that can happen if OCTA funds are diverted is that some road projects would be delayed, not canceled, and the transit agency would be prompted to explore privatizing its bus operation.

The $1-billion tax transfer is contingent upon the passage of other legislation allowing the appointment of a trustee to oversee the county’s bankruptcy recovery--a condition that Gov. Pete Wilson may not accept.

It’s unclear how many of the system’s 800 drivers would be laid off if Wilson signs the transit tax shift bill that the state Legislature adopted just after midnight Sunday.

The tax diversion, which passed the Assembly, 46 to 19, and the Senate, 23 to 12, allows both Los Angeles and Orange counties to take the quarter-cent portion of the existing sales tax that now pays for bus service. The bill transfers $75 million a year for five years to Los Angeles County from its transit funds and $70 million annually for 15 years to Orange County from the OCTA.

But transit officials and Steiner warned Sunday that siphoning off bus funds to bail out the county may force OCTA to abandon major road and highway projects, using the money to operate the buses.

However, those funds cannot be shifted to another use without going through several legal hurdles and a possible public vote.

Orange County could only use OCTA’s bus money to satisfy the massive debts that resulted from the county’s $1.7 billion securities trading loss that triggered the bankruptcy last December. Los Angeles County could put the transit taxes into its general fund.

OCTA’s executive committee will meet in emergency session at 8:30 a.m. today.

In Los Angeles, the state lawmakers’ action was hailed by county supervisors, who last Friday endorsed the $75-million annual raid on the Metropolitan Transportation Authority to help deal with their unprecedented $1.2-billion deficit.

“California and Los Angeles have a choice--keep our hospitals, health clinics and parks open or not have the subway delayed for a year or two,” Los Angeles County Supervisor Zev Yaroslavsky said. “No one will die if the subway is delayed but people will die if hospitals or health clinics have to be closed.”

But Los Angeles County supervisors face local opposition. On Friday, Los Angeles Mayor Richard Riordan phoned Wilson urging him to reject the shift. “These are desperate proposals for a desperate situation,” said Riordan, who also is the MTA’s vice chairman.

Reached as part of a compromise $57-billion state spending plan that passed the Senate, the measure, called the Emergency Sales Tax Realignment Act of 1995, was vigorously opposed by OCTA and MTA.

Before Orange County can take any of the money, the Legislature must approve a follow-up bill authorizing the appointment of a state trustee to make sure the county acts prudently to settle the bankruptcy. The bill does not require the immediate appointment of trustee but it expresses the Legislature’s intent to have one appointed if the county fails to resolve the bankruptcy.

If signed by Wilson, the measure would take effect Jan 1. But there were indications Sunday that Wilson would veto the legislation because of the trustee provision. He previously vetoed a bill by Sen. Lucy Killea (I-San Diego) to appoint a state trustee to oversee the county’s recovery from bankruptcy.

Wilson spokesman Paul Kranhold said Sunday that the governor was studying the issue, awaiting final action by the Assembly to approve a new state budget.

As badly as the county needs the revenue, Supervisor Marian Bergeson called the trustee feature a “poison pill” for Orange County.

“I’m not sure what the governor’s position will be,” Bergeson said Sunday. “L.A. County is ecstatic because the money goes into their general fund.

“But it appears ours is contingent upon the trusteeship, and that doesn’t sit well within the county and it doesn’t sit well with the governor,” she said. “We’d like to have the commitment that there’s going to be a revenue source, but a poison pill goes with it.”

Senate Leader Bill Lockyer (D-Hayward) insisted on the trustee, saying the threat of one is needed to ensure that the Orange County supervisors follow through quickly with a plan to pay back the county’s debts on Wall Street and elsewhere. As envisioned by Lockyer and others, the trustee bill would simply let Wilson install a receiver if the county stumbles.

“What I want is a comprehensive Orange County solution,” Lockyer said.

By tying the transfer of transit taxes to a bill establishing what a trustee would do if appointed, the Legislature created a firm deadline and the necessary pressure to resolve the bankruptcy, Oftelie said, adding that it appears three conditions must be met.

First, the county won’t get the money unless the trustee bill passes before the legislative session ends Sept. 15. “It sets the stage for the appointment of a very powerful trustee,” Oftelie said. “And it gives local government about 30 to 45 days to sort out their own solution to the problem.”

Second, the county must produce a bankruptcy settlement plan of adjustment to be approved by the Bankruptcy Court before any money is transferred, Oftelie said. And third, the money must be used exclusively to pay bankruptcy debts.

“It looks to me like they’ve put a gun to the head of the Board of Supervisors, but it’s more powerful than that,” Oftelie said. “They’ve pointed a cannon at all local government and I think this foreshadows that there will be some extraordinary powers put into this.”

Some lawmakers want OCTA to scrap plans for a light-rail system and turn the money for that project over to the county. The problem, however, is that the money for the much-debated urban light-rail project won’t be available until after the year 2000.

“Borrowing against future capital to run operations today is exactly the death spiral Los Angeles County is in,” Oftelie said. “Mortgaging your future capital to pay today’s operations is an extraordinarily dangerous way to operate any business or government.”

Supervisor Steiner said he spent a frantic Saturday lobbying Sen. William A. Craven (R-Oceanside) and the governor to block the tax shift “so that it could be a decision that’s based on deliberation and not desperation.”

Meanwhile, the co-chairman of the Measure M citizen’s oversight committee called the tax shift a “sneaky backdoor” maneuver that betrays voters. Measure M, approved by countywide voters in 1990, raised the local sales tax to generate $3.1 billion over 20 years for transportation.

“I think our elected officials are ignoring the voters,” Pat Callahan said. “I think now they’re adding insult to injury by trying to pay for the bankruptcy on the backs of the people who use the bus system to get work and who need it most.”

OCTA chairman Smith, who also is mayor of Westminster, denounced the deal as a “politically motivated” attempt to cram down a “simple solution to a complex program” in Orange County.

“We have tried to explain to our delegation what the ramifications of this are, but they don’t want to hear it,” Smith said. “They aren’t interested in the true facts. They want to impose a simple solution to a complex program.”

He decried what he saw as a legislative effort to force the county to use voter-approved Measure M money, designated for highway projects, to keep the bus system afloat.

“OCTA has been one of the most successful public bodies in the history of Orange County,” Smith said, “and now they’re trying to destroy it.”

Staff writers Paul Feldman, Rich Simon, Josh Meyer and Jeff Rabin contributed to this report.