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Allen Closer to Approving Recovery Plan : Bankruptcy: The Speaker remains opposed to cuts in bus service. O.C. and other officials gather at the Capitol to urge legislators to approve the county's proposals.


SACRAMENTO — Assembly Speaker Doris Allen moved closer Monday to embracing Orange County's bankruptcy recovery plan, but the proposal drew fire from a handful of cities that have been holding out for the option of suing the county.

Allen (R-Cypress) had stood in recent days as a potential roadblock to the plan, which will require state legislation to be implemented, but during a two-hour hearing on the measure Monday her complaints appeared to mostly melt away.

Her biggest remaining concern is that a proposal to use $38 million annually from a transit sales tax could hurt county bus passengers. Allen would prefer to see the money drawn from other revenue sources now under control of the Orange County Transportation Authority, which operates the county's buses.

"You won't have my support if you mess with the bus service," Allen said. "I could never support anything that is balanced on the backs of the ridership."

Allen's stance came just hours after half a dozen officials from a variety of Orange County agencies and the county itself held a Capitol news conference to call for passage of the bankruptcy recovery plan, which is being debated by a Senate-Assembly conference committee.

The news conference was timed to prod Allen and other reluctant lawmakers with just a week left before the Legislature adjourns for the year. Supervisor Marian Bergeson and Board Chairman Gaddi H. Vasquez called the blueprint for recovery a consensus plan embraced by most participants in the county's failed investment fund.

But they also warned that the plan was the result of a fragile compromise among more than 200 government agencies, and that it could be undermined if Sacramento lawmakers demanded changes. They noted that OCTA, which had been wary of the plan for weeks, had voted earlier that morning to go along with it.

The county declared bankruptcy late last year after its investment portfolio lost nearly $1.7 billion.

While the county was puffing about building a consensus, officials from more than a dozen cities that lost money in the county investment pool were working the halls of the Capitol to express their concerns about the bankruptcy recovery plan.

Most of the cities, school districts and special districts that invested with Orange County chose to go along with the county's bailout plan, but a handful took the second option of not getting county IOUs or promises of future payments in order to reserve the right to sue.

Those so-called Option B cities are upset that Sacramento lawmakers appeared headed toward adopting legislation that would include a state trustee with the power to strip them of any rights to file lawsuits against Orange County.

State Sen. Lucy Killea (I-San Diego), who is chairwoman of the conference committee, noted that officials of the Option B cities--most of them located outside Orange County--have threatened the passage of the legislation by whipping up opposition among the state lawmakers who represent those areas.

"It's unsettling," Killea said. "I hate to have this jeopardized at this late date. . . . I'm not saying that [state lawmakers] were deliberately misled [by Option B cities]. . . . But I think there's some serious misunderstanding."

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