Aid Deal for L.A., Orange Counties Nears Approval : Crisis: Working late, Legislature gives nod to O.C. bailout, which is tied to help for Los Angeles. Meanwhile, 5,200 workers get layoff, demotion notices.

After months of deadlock, the state Legislature provided a rescue package for bankrupt Orange County on Friday, and moved toward approval of crucial help for financially teetering Los Angeles County.

Even as Orange County seemed to be emerging from its darkest days, Los Angeles County’s worst-ever financial crisis continued to play itself out with anguish and anxiety.

Nearly 5,200 county health workers--from doctors and nurses to lab technicians and custodians--were handed terse notices throughout the day saying they will lose their jobs or be demoted within two weeks unless financial salvation arrives from both Sacramento and Washington.

“In my 31 years of county service, I never dreamed I’d see a day like this,” said Harvey Kern. spokesman for County-USC Medical Center, the nation’s largest public hospital where more than 1,000 employees got layoff notices. “What do you say to people? How do you console them?”

“It is a tragic day,” Los Angeles County health czar Burt Margolin said. “Some very talented people--a lot of very talented people--are losing their jobs and being demoted and a system that provides vitally needed care is suffering serious damage.”

Even the $150-million-plus package under review in Sacramento would not be enough to solve Los Angeles County’s financial problems, officials acknowledged, but the pressure was on to deliver some kind of help as lawmakers at the state Capitol in Sacramento inched toward their scheduled midnight adjournment of this year’s legislative session.

The Orange and Los Angeles county rescue plans are tied together legislatively, but the approval of the Orange County package and the Assembly’s approval of part of the Los Angeles package seemed to indicate that success for both was at hand. They also still need approval of Gov. Pete Wilson.

‘Road Ahead to Recovery’

The legislation passed Friday apparently gives Orange County the financial resources necessary to emerge from bankruptcy, probably by next summer. Wall Street, angry over bonds in default and threatening to blackball one of the nation’s wealthiest counties, will get paid. So will hundreds of people and companies that sold services and equipment to the county.

“This, thankfully, gives us a clear road ahead to recovery,” said Orange County Supervisor Marian Bergeson. “Finally, we’re on our way.”

“I don’t think anyone is overwhelmed by what has been produced,” said Assembly GOP Leader Curt Pringle (R-Garden Grove) of the bankruptcy package. “But this was the necessary piece to put the bankruptcy behind us.”

The Orange County recovery plan also marks the conclusion of frustrating and torturous negotiations with cities, schools and other agencies that lost $1.7 billion in Orange County’s high-risk investment fund.

Since the county last December declared the largest municipal bankruptcy in U.S. history, the debate over how to climb out of the financial hole has created deep rifts in a conservative political culture accustomed to preaching to others on fiscal prudence. Most divisive was a proposal to raise sales taxes, which was overwhelmingly repudiated last summer by voters.

Several government officials’ careers have been torpedoed, including that of former Treasurer-Tax Collector Robert L. Citron, the architect of the county’s high-wire investment strategy who has since pleaded guilty to six felonies and now faces a possible sentence of 14 years in state prison. County services and staff have suffered painful cuts.

Friday’s legislation allows Orange County to divert funds from various county agencies, including its powerful transportation authority. At the same time, cities, schools and others have backed off their long-running demands for a 100% refund of their losses, accepting instead the uncertainty of litigation against brokerages and others blamed in the county’s investment schemes.

As for Los Angeles County, the end-of-the-session political whirlwind in Sacramento, coupled with deep uncertainty about prospects of a federal rescue package, left supervisors, health workers and patients wondering whether the nation’s second-largest public health system would survive this crisis.

In Washington, the Clinton Administration was acutely aware of the problem and vowed to help if possible. “We very much want to be able to help,” said a senior White House official. “But we’re not there yet.”

“We still have a long way to go,” agreed Supervisor Zev Yaroslavsky. “The state piece and the federal piece have to come together to avoid extremely Draconian steps. . . . It is an unmitigated tragedy that 1995 America has allowed its largest county to teeter on the brink of a financial and a health care disaster,” said Yaroslavsky.

Layoff Notices Hit L.A.

In Los Angeles, the day began with the first layoff notices going out shortly after midnight--often with a loudspeaker summons to a supervisor’s office and a request to please sit down. Within hours, employees at all of the county’s vast network of comprehensive health centers, community clinics and hospitals had gotten the news.

Many lost jobs even though their facility was not targeted for closure, to make room for others with more seniority.

All told, 4,166 county workers received tersely worded layoff notices, which blamed the state and federal governments for the county’s woes. Another 1,034 were told they will be demoted, and 1,500 more were transferred from one facility to another when the closures begin Oct. 1.

“Some expected it. Others were very upset, and understandably so,” said nursing director Irene Recendez at the Roybal Comprehensive Health Center in East Los Angeles, halfway through her list of 75 layoff meetings. “It’s a total nightmare.”

Even though it has been saved from the chopping block, for now, County-USC Medical Center was hit unexpectedly hard. The layoff notices began in the pre-dawn darkness and continued until midnight.

“A lot of people who issued letters got letters themselves,” said spokesman Kern, visibly shaken. “I’ve seen a lot of tears.”

The mammoth Eastside medical center, like other facilities, was reeling from Friday’s hit. Doctors, nurses and technicians alike meandered out of its front doors as if sleepwalking, clutching the manila envelopes that contained information on job fairs and the like, and showed to their fellow employees that they were among those who may soon be gone.

As employees at one clinic after another found out who received layoff notices, many patients and workers--particularly those in inner-city areas--expressed anger, sadness, frustration and dismay.

Some expressed greater concerns about the future of their patients than about their own.

“I have such a sick feeling for my friends,” said Cliota Davis, a licensed vocational nurse at the Hubert H. Humphrey Comprehensive Health Center in South-Central Los Angeles. She will be transferred. But the entire team of pediatric doctors she worked with were told they will be let go. “I feel,” Davis said, “as though they just destroyed my family.”

Just in case, there was heightened security all around. At the sprawling Roybal Comprehensive Health Center in East Los Angeles, nurse Gabriel Centeno wandered past more than a dozen security police, poring over the same typewritten letter given to thousands of other health workers across the county.

“This is to notify that you will be laid off . . . at the end of your shift on Sept. 30, 1995,” it read. “We appreciate your dedicated service to the County of Los Angeles, and regret the necessity of this action.”

As she read, Centeno was approached by a couple of her nursing colleagues with open arms. “I’m gone,” she told them. “It’s hard. But I feel more for the patients than I do for myself.”

“At least we have our health,” said a colleague, as a small consolation.

A few blocks away, Gloria Molina, chairwoman of the Board of Supervisors, faced a sad and angry crowd of health workers and patients who had marched from Roybal to her storefront field office.

“Believe me, this is a disappointing day for me as well,” Molina told them from atop a union sound truck. “It’s been a tough decision, but a decision that had to be made.”

Without a state and federal bailout, Molina warned that entire hospitals, along with the county’s health centers and most clinics, may also have to close.

“Very frankly, we’re not even sure now we can save the hospitals,” she told them, standing aside employee union leader Gilbert Cedillo. “The situation has gotten worse, and I’m disappointed too.

“Hopefully we can keep the clinics open,” Molina said, by forming public-private partnerships with hospitals or medical groups. But the crowd booed and jeered.

Dr. Jack Kent, a physician at Roybal, wearing a black armband, seized on Molina’s choice of words, and shouted back at her: “Hopefully? You hear that? We’re living on hope!”

To Molina, the crowd chanted: “Fix it, fix it” over and over again.

But there were no easy fixes.

“This is not the result of any kind of rational planning,” said county health czar Margolin. “This is driven by a budget disaster.”

Years of Excess Spending

The county’s current financial predicament comes after years of spending far more than it takes in, supporting a massive work force and a wide array of services in part by borrowing that has included mortgaging the Hall of Administration itself.

This year, however, the budget process has taken on added urgency because of decreasing revenue due to a punishing recession, cuts in state and federal funding, a huge shift of county property taxes to help the state out of its fiscal woes, and newfound scrutiny of county fiscal practices after neighboring Orange County declared bankruptcy.

On Friday, those forces came together in the mass layoff notification.

“It’s a frustration to everybody,” said outgoing county Health Services Director Robert Gates. But he was especially concerned about the patients. “We’re used to treating everybody who comes through our doors. . . . They need our system for care,” he said. “We’re not going to be able to respond unless something improves.”

After 3 1/2 months of ups, downs, rumor and recrimination about what the fiscal crisis might bring, the impact was sweeping.

More than 1,000 health workers in the San Fernando Valley area received layoff notices. At the county’s newest hospital--Olive View/UCLA Medical Center in Sylmar--746 of about 2,400 employees received notices.

“People are devastated. I am devastated,” said Melinda Anderson, Olive View’s administrator. “But even though we’re in the middle of a curtailment, people are still getting sick, and we have to collect ourselves so we can take care of them.”

Cedillo, general manager of county’s largest labor union, Service Employees International Union, Local 660, also urged workers to stay at their posts and provide care. He spent the day criss-crossing the county in his new black Mustang speaking at clinic after clinic, exhorting workers not to give up. The money will come from Sacramento and Washington, he said, because it simply has to. The system cannot shut down. “Don’t give up!” Cedillo told one group. “This is not over yet.”

As the day ended, the fate of Los Angeles’s bailout package was in the hands of weary lawmakers whose session has been more notable for its bitter political infighting than its accomplishments.

In a departure from the internal chaos that has racked the Assembly for months, Los Angeles area Democratic legislators scored a major victory when the lower house voted 61 to 8 to divert $150 million from the MTA to the county. The bill was sent to the Senate.

Though it is only a fraction of the money needed to rescue the county’s deeply troubled health care system, the proposed transportation fund shift was substantially more than the $50 million that had appeared possible only days ago.

Determined to help the county, the Democrats won over important former foes in securing approval from Gov. Pete Wilson.

Assemblywoman Martha Escutia (D-Huntington Park), the author of the MTA measure in Assembly, said she was “very happy that Republicans and Democrats alike saw the wisdom passing a measure that will give some vital relief to L.A. County.”

Rabin and Meyer reported from Los Angeles, Vanzi from Sacramento. Also contributing to this story were Times staff writers Jack Cheevers, Timothy Williams and Richard Simon in Los Angeles, Paul Richter and John M. Broder in Washington, and Jenifer Warren in Sacramento.