O.C. Plan’s Variations Draw Fire : Bankruptcy: Wilson spokesman says board was to devise single recovery scheme, not options for legislators. Vasquez says this will yet happen.


Declaring that the Orange County Board of Supervisors has abdicated its leadership role, a spokesman for Gov. Pete Wilson expressed dismay Wednesday over the county’s inability so far to cement a plan to end the worst municipal bankruptcy in U.S. history.

Spokesman Paul Kranhold said it was Wilson’s intention for the county and other participants in the financial debacle to reach agreement on one plan, not throw the decision into the lap of the Legislature when it returns Monday for its final three weeks of work.

“If this is all they plan to do, then it’s extremely disappointing,” Kranhold said. “The governor views it as an abdication of leadership. . . .

“Rather than concentrating on one plan the Legislature and governor could recognize as the county’s road map to recovery, they’ve simply passed the buck for Sacramento to make the tough choices, putting their own fate in the hands of legislators from Eureka to San Diego.”


The governor did not go so far as to demand that the supervisors narrow their choices, nor did he call for a state trustee to take over operation of the county, Kranhold said. “I frankly don’t know if telling them to go back to the table would do any good,” he said.

But county officials said later Wednesday that the hubbub in the state Capitol was much ado about nothing. Board Chairman Gaddi H. Vasquez said the governor and other state officials were being led astray by misleading news reports, and that the county would soon settle on a preferred recovery option to recommend to the state Legislature.

Vasquez said the county will submit a single, “definitive” recovery plan to Sacramento, in addition to the half-dozen options approved by the board Tuesday. “Right now, staff is working on narrowing the scope,” Vasquez said. “The six options were parameters to work by. . . . When all is said and done, we will have one recovery plan to present.”

Supervisor Marian Bergeson, who criticized the board Tuesday for not backing one particular recovery plan, said she is “confident that we are on the right track” to choose a plan the governor will embrace.


“My hope is that we can become more specific and narrow down the options to something that is more in line with the commitment we made to the governor,” she said, alluding to a letter Bergeson and Vasquez wrote to Wilson a month ago promising to give the Legislature a concise plan this week.

Bergeson also said it would be unwise simply to give the Legislature a list of options, because the county would have no way to influence the final outcome. “Understanding the political process, you can’t just hand it to the Legislature and let them decide,” said Bergeson, a former state senator. “The plan unravels under that scenario.”

The half-dozen scenarios embraced by the supervisors Tuesday involve taking tax revenue from cities, special districts and the Orange County Transportation Authority in hope of infusing the county treasury with $74 million to $160 million annually for 15 to 20 years to make up for $1.7 billion lost on risky investments.

County officials have also promised to continue seeking other options, such as selling assets, privatizing services, downsizing government and cutting costs. The county’s plans envision the imposition of a state trustee with broad powers to implement a recovery plan if the county stumbles in its efforts, although most board members believe the county can succeed on its own.

Other state lawmakers, meanwhile, continued to raise the specter of a state takeover if the county fails to reach consensus on a single recovery plan.

“It’s fair to insist that they have a plan,” state Senate President Pro Tem Bill Lockyer (D-Hayward) said. “If they don’t have one, then the next serious discussion will be on the trustee issue.”

“I’m very disappointed,” said state Sen. Lucy Killea (I-San Diego), co-chairwoman of a Senate special committee on the bankruptcy. “With this, they’re just asking for a full trusteeship.”

State officials also groused that the county might try to simply throw its tough decisions onto the shoulders of state lawmakers.


“The dilemma is that no one wants to raise taxes and there are objections any time you reorient existing government revenues,” said Scott Johnson, chief counsel to the state Senate special committee. “It’s a lose-lose proposition for the Legislature to get involved with this. It’s an absolutely thankless job.”

Some lawmakers from Orange County, meanwhile, suggested that the county might be better off just submitting a laundry list.

“I don’t think it was a big deal,” said Sen. John R. Lewis (R-Orange), who has been helping to shepherd the recovery efforts through the Legislature. “The fact of the matter is, if they had given us some kind of proposal, it would have been changed by the Legislature anyway.”

Lewis and other lawmakers said that a final plan will probably only surface in the last days of the legislative session, thus avoiding the sort of assault from all sides that can topple even the best idea.

“This strikes me as something that will be solved at the last minute, if it’s solved at all,” Lewis said.

Lewis and other members of the county’s delegation in Sacramento have pushed to target the Orange County Transportation Authority and various water and sanitation agencies that have the resources to help bail the county out of the bankruptcy.

Cities and special districts that had money invested in the bankrupt pool have been nearly unanimous in their demands for a 100% return on their deposits, while insisting at the same time that any taking of their tax funds would be devastating. The cities have been repaid much of the money they had in the failed investment pool, but are still owed more than $400 million.

On Wednesday, officials from cities and special districts continued their attack on the county’s recovery program. They said the diversion of their tax revenue could have a devastating effect on governments throughout the county.


“Only a mugger would do [the recovery] in the way that [county bankruptcy attorney Bruce] Bennett is trying to do,” said Peer Swan, chairman of the Irvine Ranch Water District. “I don’t think that approach can work in this county without terrible recriminations.”

Swan further accused the county of “raiding” the coffers of cities and special districts, “jamming the plan down our throats” instead of working with all agencies to develop a plan of consensus.

Bennett denied that the county was forcing the recovery plan on anybody.

“We’ve laid our cards face up all along,” he said. “It seems to me we have a couple of choices. We either seek new revenue streams or sit here and do nothing.”