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Wilson Delivers Package for O.C. Bankruptcy Aid : Crisis: Governor signs into law a trio of bills that let officials tap into $800 million in transportation revenue.

October 10, 1995|MATT LAIT | TIMES STAFF WRITER

SANTA ANA — Gov. Pete Wilson on Monday gave Orange County the power to recover from its bankruptcy debacle, signing into law a trio of bills that let local officials pay their debts by tapping into more than $800 million in transportation revenue and other funds.

"Contrary to what you might have read or heard, this is not a county on the brink of collapse," Wilson told about 150 state and local officials who attended the signing ceremony at the Santa Ana Civic Center.

"Orange County remains a job-creating, financially vibrant cornerstone of the economic miracle that I like to call the 'California Comeback,' " the governor said.

The signing, which occurred within view of the office of former Treasurer Robert L. Citron, whose risky investment strategies plunged the county into financial ruin, marked only the third public appearance by Wilson in Orange County since the Dec. 6 bankruptcy declaration.

Wilson's action has been expected ever since state lawmakers passed the bills on the last day of the legislative session last month. Nonetheless, his formal approval of the laws was hailed as a watershed moment in the county's effort to recover from bankruptcy.

"This is a giant step forward," said county Chief Executive Officer Jan Mittermeier. "We now have the tools we need to get out of bankruptcy."

Wilson, whose speech was interrupted periodically by student protesters demonstrating against the governor's opposition to affirmative action at University of California schools, said the legislation will enable local officials to pay their debts and pull out of bankruptcy without a state bailout.

"This plan protects Orange County's essential public services," said Wilson, who was flanked by Sacramento and Orange County politicians. "It provides the county with the resources it needs to educate kids and keep criminals off the streets. It is an important step toward guaranteeing that future generations will enjoy the same quality of life that drew many here in the first place."

While the legislation gives Orange County the ability to emerge from bankruptcy, it also includes a provision for a state takeover next year if local officials stumble. If the county is not about to emerge from bankruptcy by next May, Wilson will be required to appoint a trustee to assume command of county government, which was forced into bankruptcy when Citron's investments lost $1.7 billion.

"Most importantly," Wilson said, "this plan reinforces that people who invest in California won't be shortchanged. We'll honor our obligations and meet our financial commitments."

County officials say the package of new laws, which become effective Jan. 1, will be vital in their effort to pay off more than $700 million in bond debt over the next 20 years. If all goes well, the county should emerge from bankruptcy by mid-1996, they said.

But by then, it might be a significantly different county, some officials said Monday.

"This will move Orange County out of bankruptcy today, but it will create infrastructure problems in the future," said Stan Oftelie, the county's transportation chief whose revenues will be redirected to pay the county's obligations.

The bankruptcy has taken a tremendous toll within county government. The county's discretionary spending has been reduced by 41%, nearly 2,000 county employee positions have been eliminated and county services--especially in health care--have been significantly cut. Even now, supervisors are exploring other ways to downsize and reorganize county government.

Under the terms of of the newly signed bills, the county will divert $38 million annually in sales tax money that goes to the Orange County Transportation Authority and use it for the bankruptcy recovery. In exchange, the county must shift to $23 million a year in gas tax money now used for road construction to the transit agency. Another $12 million a year is redirected from restricted funds that normally would go to the county's redevelopment agency, harbors, beaches, parks and flood control district.

Supervisor Marian Bergeson praised Wilson Monday for giving county officials the "tough love" they need to focus on solving their own problems.

"He said, 'Get your act together,' and we did," said Bergeson, adding that Wilson played a key behind-the-scenes role in the moving the legislation through Sacramento.

Others were less impressed with his involvement. Some Capitol insiders said they toiled for months to produce the recovery legislation with little help from Wilson. They say Wilson left local officials who caused the problem to come up with their own solutions while he busied himself with running for President.

Times staff writer Eric Bailey contributed to this story.

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