Supervisors Authorize Hiring Lawyers to Go After Lost $48 Million

Tuesday, Sept. 13, 2011 | The Orange County Board of Supervisors today authorized in closed session the hiring of outside attorneys to explore legal action to recoup $48 million in tax revenues that Gov. Jerry Brown took to help balance this fiscal year's state budget.

The board's action is the latest twist in the drama resulting from the 2005 bankruptcy refinancing that left the county without legislative authorization for $48 million in vehicle license revenue.

County officials were aware that they needed to obtain authorization or risk losing the money, but they did nothing for five legislative sessions.

Board Chairman Bill Campbell and Nick Berardino, general manager of the Orange County Employees Association, traveled to Sacramento on several occasions in recent months in an all-out attempt to persuade state legislators to restore the funding.

And several members of Orange County's legislative delegation labored until early Saturday morning to pass a law that would have done just that.

But the bill died in the state Senate as numerous other counties and cities got wind of what Orange County was seeking and tried to amend the bill to also restore some of their lost vehicle license fees.

"During the entire process, there were a number of counties and cities who were trying to make amendments on equity issues," said Donna Grubagh, deputy county CEO for legislative affairs. That dynamic prompted Senate President Pro Tem Darrell Steinberg (D-Sacramento) to hold back the bill, saying he wanted to work on a "global fix" in January.

Campbell, who criticized Democrats in the Assembly on Friday, took time Tuesday to praise the efforts of Assemblyman Jose Solorio (D-Santa Ana) and Assemblywoman Diane Harkey (R-San Juan Capistrano), saying they did an effective job of rounding up votes.

That last-day scramble was a situation Campbell, a former assemblyman, wanted to avoid. "I was frustrated we didn't move the bill until last day," he said.

The biggest challenge, Campbell said Tuesday, was to explain to legislators why Orange County's situation is different from other jurisdictions'. "It was apples and apple sauce," Campbell said of comparisons.

But by then it was too late. So now, Campbell said, he will spend the next few months lobbying Steinberg to see that his "global fix" works for Orange County.

But until then, supervisors aren't going to sit on their hands.

"This board will need to face alternative action plans as a result of the loss of the money," Campbell said. "I don't think we can wait given what's happened."

Beyond legal action, it seems supervisors are also beginning to contemplate radical options, such as withholding funds from Sacramento.

On Tuesday the board was asked to act as a fee-for-service contractor and provide pest spraying for the state Agriculture Department. Supervisor John Moorlach wondered aloud whether supervisors should balk, given that Sacramento owes Orange County more than $120 million in revenues that have not been paid.

Moorlach said losing the $48 million means radical options should be on the table.

"I'm just wondering, if we were in the private sector, we wouldn't condone doing business with this kind of deadbeat client," Moorlach said.

County staff is expected to present a series of recommendations on Oct. 4 to compensate for the lost $48 million through budget cuts, Campbell said. Among the alternatives are layoffs and fewer outside contractors.

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