ORANGE COUNTY IN BANKRUPTCY : Voters Are Ready for Tax to Help Schools or Police, Poll Shows : Crisis: A majority of those surveyed would support a temporary sales tax increase but strongly oppose taking a bigger bite from property owners.

IRVINE —  Orange County voters are coming around to the view that a sales tax increase may be needed to deal with Orange County’s bankruptcy, especially if the levy is limited to no more than two years and dedicated to either public schools or law enforcement, according to a poll released Wednesday by the Field Research Corp.

“The public is getting evidence that some bad medicine is being prescribed, with the layoffs and the cuts in service,” said pollster Mervin Field, who conducted the survey. “We are seeing the further erosion of the public’s reluctance to impose a sales tax.”

Although voters oppose an unrestricted sales tax increase by a ratio of 6 to 4, it is a different story when the proceeds of such a tax increase are tied to education or law enforcement. The highest approval rating, with two-thirds of those polled in favor of a tax increase, is a one-quarter cent sales tax earmarked for schools and limited to one year.

Six in 10 voters would agree to a half-cent tax dedicated to education for one year alone but support starts to plunge if the tax is applied for two years or longer. In the poll, support for an education-related sales tax was virtually the same whether a voter had a child in school or not.

While voters also endorse the idea of a sales tax for law enforcement, they are not quite as enthusiastic. They are split evenly on whether they favor or oppose a general tax increase for law enforcement, but if it was put on the ballot at one-quarter cent for one year, six in 10 would approve it. Only five in 10 would endorse a half-cent tax for two years.

“The public doesn’t like any tax,” Field said. “But when a tax is earmarked for a particular purpose, one that the public supports and endorses, you will find the public supporting that idea. If the public feels this is the only way out, more times than not it gets approved.”

The poll results were made public on the same day that Chief Executive Officer William J. Popejoy told county supervisors that the county’s financial recovery cannot occur without a tax increase.

The poll also found that voters believe the financial calamity is one that should be solved at the local level. And while all of the governmental agencies that invested in the county’s doomed investment pool bear some financial responsibility, it should be up to Popejoy, the Board of Supervisors, top county administrators, and other local elected leaders to take the lead in cleaning up the mess.

“Generally when a (natural) disaster occurs . . . people look to the federal government first, and the state next,” Field said. “But this is a man-made disaster . . . and people think this is an Orange County problem . . . and feel it should be solved locally.”

Nearly all of those surveyed had heard, seen or read something about the county’s financial crisis, and two-thirds said they had been following it closely. Nearly nine in 10 said they considered the situation serious.

Of all the ways to deal with the county’s $1.69-billion investment loss, nearly nine in 10 advocated further cutbacks in county spending. So far, Popejoy has sought to reduce the county’s annual general fund budget by $188 million--from $463 million to $275 million--by laying off more than 1,000 county employees and eliminating 563 more vacant job positions.

Nearly three-quarters of those surveyed favor a temporary tax on cigarettes, tobacco or alcohol, and nearly six in 10 support the sale of county-owned buildings, parks and other properties. Popejoy has already proposed selling $100 million in property, much of it in county buildings that county agencies would lease from the new private owners and occupy as tenants.

While voters were evenly split over whether to temporarily increase taxes on hotels and entertainment or charge higher fees to those who use local government services, they were strongly opposed to the county engaging in any more borrowing, cutting back in spending for public schools, or defaulting on debt. More than eight in 10 voters opposed any possible move to increase local property taxes.

The poll of 818 registered voters was conducted by San Francisco-based Field Research Corp. between Feb. 16 and Feb. 20 for the brokerage firm Charles Schwab & Co., which holds $41.5 million in Orange County bonds on behalf of mutual fund clients. The company paid $38,000 for the poll.

Speaking after Field’s presentation of the poll results at the Irvine Marriott Hotel, Schwab officials said they are most concerned about Orange County defaulting on its debt.

“In terms of our interest, I think that we’re most concerned that a precedent not be set here that municipalities be able to repudiate their obligations,” said A. John Gambs, chief financial officer for Schwab in San Francisco.

“We have $1.3 billion in California money funds, and we’re going to go out of business if California municipalities say they have the wealth to raise taxes, but we’re not going to do it,” Gambs said.

Schwab officials said they were encouraged by the poll’s results, which showed that three-quarters of those surveyed opposed the idea of the county defaulting on its debts, and that more than nine in 10 believe it would be serious matter should that happen.

Nine in 10 believe also believe that defaulting on debt would have a negative impact on jobs and property values in Orange County, while almost that many say such a move would lower the quality of life here and make it difficult to attract new business.

Most of those surveyed also think that if the county defaults, it will not be able to borrow money in the future, or would make it more expensive for the county, its cities, its schools and other agencies to get future financing.

When registering their opinion over what basic services could be cut, respondents were most strongly opposed to slashing fire and police protection, with nearly nine in 10 against. About eight in 10 were against cutting aid to local public schools and public assistance programs for the elderly and disabled.

A strong majority also oppose cuts in spending for libraries, health and sanitation, or water and sewer service. Although also opposed to trimming public assistance for low income families with dependent children and for road and highway repair, the level of opposition was only about five in 10. A majority of those surveyed favored cutting parks and recreational spending.

Nearly three-quarters of those surveyed were over 40 years old, eight in 10 were white, three-fourths did not have a child in school, and three-quarters made $40,000 or more per year. Male and female respondents were evenly split, and more than half identified themselves as Republicans.

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Tiptoeing Up to Taxes

Orange County voters are willing to temporarily increase local “sin taxes” on tobacco and alcohol products, but they overwhelmingly oppose an increased property tax levy. Any increased taxation, even for schools and law enforcement, meets resistance if it is for longer than two years.

What steps should be taken to deal with budget deficits?

No Favor Oppose opinion Temporarily increase local taxes on 72% 27% 1% cigarettes, tobacco Temporarily increase local taxes on 72% 26% 2% alcoholic beverages Temporarily increase taxes on hotels, 48% 49% 3% entertainment establishments Charge higher fees to users of 43% 48% 9% local government services Temporarily increase local sales taxes 38% 60% 2% Make cutbacks in public school spending 20% 77% 3% Temporarily increase local property taxes 15% 83% 2%

*

Support for temporary increase in local sales tax to raise more money for the public schools or for law enforcement in Orange County.

PUBLIC SCHOOLS No Favor Oppose opinion One-quarter cent for one year 66% 31% 3% One-half cent for one year 61% 27% 12% One-quarter cent for a period of two years 59% 38% 3% One-half cent for a period of two years 55% 35% 10% One-quarter cent for a period of four years 43% 54% 3%

LAW ENFORCEMENT No Favor Oppose opinion One-quarter cent for one year 60% 37% 3% One-half cent for one year 53% 31% 15% One-quarter cent for a period of two years 55% 43% 3% One-half cent for a period of two years 49% 37% 14% One-quarter cent for a period of four years 43% 55% 2%

Note: Figures may not total 100% due to rounding; 818 voters were interviewed by telephone from Feb. 16-20. Margin of error is plus or minus 3.5%

Source: Charles Schwab & Co. Inc.