Donna Grubaugh, the county’s top staff lobbyist, is seeking an internal transfer as her department takes heat for not fixing a small legislative glitch that is costing county taxpayers $73 million each year in lost property taxes.
Grubaugh’s planned exit comes after a unanimous, closed-session vote Tuesday by the Orange County Board of Supervisors to appeal a Superior Court decision to award the disputed property tax revenue to the state Department of Finance. The amount is now tallied at close to $147 million.
In addition to the legal battle, county leaders are putting on a full-court press in Sacramento to resolve the conflict before Gov. Jerry Brown formally submits his budget next month.
The controversy involves a legislative glitch that occurred in 2005 when supervisors moved to refinance nearly $1 billion in debt incurred during the county's 1994 bankruptcy.
The move saved taxpayers nearly $100 million and shaved a decade of payments off the debt, but it also created a problem.
Orange County had a special arrangement during the bankruptcy whereby bondholders received the county’s portion of vehicle license fees to help pay off the debt. The arrangement inadvertently omitted when the county refinanced the debt in 2005 and state leaders later switched counties’ portion of the vehicle license fees in exchange for property taxes.
That put one of the most Republican counties in America in a difficult spot — depending on one of the most Democratic state legislatures for help.
Despite being warned publicly through media coverage at the time, the county’s legislative advocates never put the issue on Orange County’s annual legislative platform.
Even in 2009 when state Sen. Lou Correa, D-Santa Ana, held a critical budget vote and secured the county approximately $50 million more in property taxes, apparently no one from the county asked him to also adjust the county's share of property taxes to restore the post-bankruptcy arrangement.
Correa has said he easily could have addressed the issue if someone from the county had raised it.
Then in 2011 with the state facing a massive budget deficit, Brown’s budget staffers discovered the glitch and seized Orange County's vehicle license fee revenue worth just over $50 million.
County supervisors have consistently avoided public discussion of the issue, largely because it forces a host of uncomfortable questions for the county’s main lobbyist, Platinum Advisors, for county Republican Chairman Scott Baugh, who represented Orange County in the Assembly at the time, and for the army of internal legislative advocates and analysts like Grubaugh.
Platinum Advisors hasn't returned calls for comment on the issue. Grubaugh in the past has declined comment, citing ongoing litigation.
Yet privately, the issue has generated intense questioning and finger-pointing.
Board of Supervisors Chairman Shawn Nelson said that Platinum Advisors lobbyists have blamed the county’s staff for not briefing them on the glitch when Platinum began representing the county.
Nelson said the toughest questions should be aimed at Correa himself, who was on the Board of Supervisors when the refinancing plan was approved and the glitch identified.
“Lou Correa was on this board when all this went down,” Nelson said. “He’s in the state Senate, and even he forgot to bring this up.”
Correa, however, said that during the bankruptcy refinancing Supervisor Bill Campbell took the lead on the issue and didn’t publicize the issue much.
Campbell has acknowledged the glitch but said legislative staff was supposed to pick up the ball.
There are a host of top officials at the county — officially more than 70 — who are supposed to keep watch over legislative matters.
That’s in addition to the $264,000 spent on Platinum Advisors, whose contract was recently renewed by county supervisors without any public questioning of its actions on the issue.