BOND TICKER : Schools Regard Tax as Key to Recovery

A proposal to place a half-cent sales tax increase on a special June 27 ballot is finding support among some school board members who see it as perhaps the best chance for school districts to recover from the county financial crisis.

Trustees at the North Orange County Community College District called a special meeting Thursday to approve a resolution in support of putting the tax issue before the voters. Other school boards are expected to consider similar resolutions over the next few weeks.

“I’m not crazy about a tax hike, but that’s the way things are,” said Ellen R. Friedmann, a trustee with the Cypress School District. “I don’t see any other way out of this.”

Last week, county Chief Executive Officer William J. Popejoy suggested the proposal to increase the sale tax from 7.75% to 8.25%. While not endorsing a tax increase, all five members of the Board of Supervisors said they intended to place the measure on the ballot.

The proposal has received a cool reception from city leaders, many of whom said they either oppose it or don’t plan to take a position.

But some school officials, whose districts face sharp cutbacks because of the financial crisis, said all options must be considered in wake of the county’s $1.7-billion loss.

“There is no way they’re going to make that up--even with a sales tax increase,” said Merlin L. Henry Jr., a Tustin Unified School District trustee.

Several educators said they hope that if the sales tax increase is approved, school districts will receive 100% of the money they invested in the county’s collapsed investment pool. Under a settlement plan now being finalized, schools would receive 90% of their money immediately with the remainder promised later.

There is some opposition to the tax idea among educators. Frank L. Ury, a trustee with the Saddleback Valley Unified School District, said it was too soon to consider new taxes.

Fullerton Councilman Sets Sights on Assembly, Not Supervisor’s Seat

Fullerton Councilman Chris Norby has announced that he no longer wants to be an Orange County supervisor and now wants a seat in the state Assembly.

Norby, who announced last month he would challenge Board of Supervisors Chairman Gaddi H. Vasquez next year, said he believes the county is not powerful enough to solve its own financial problems and has bowed out of the supervisor’s race.

“The power to do the things that I want to do is at the state level,” he said, adding that he opposes any new taxes and favors selling county-owned land and privatizing services to pull the county out of its crisis.

Norby now wants the seat of Assemblyman Ross Johnson (R-Placentia) if Johnson is elected to the state Senate.

Johnson will be the GOP candidate in a May 9 runoff election for the vacant seat in the 35th state Senate District. If Johnson should lose the runoff election, he will keep his Assembly seat, which expires in November, 1996.

“Events are moving rapidly,” Norby said. “The vacuum created by the supervisors’ inaction is being filled with a flurry of bills in the state Legislature including a trusteeship that would strip the board of much of its authority.”

In a letter to supporters, Norby wrote: “With power slipping from Santa Ana to Sacramento, I can sooner achieve the reforms I’ve advocated as your assemblyman than as your supervisor.”

Merrill Lynch, O.C. to Meet in May Conference, but No Trial Date Set

Orange County and Merrill Lynch & Co. are continuing to exchange documents in connection with the county’s lawsuit against the Wall Street brokerage firm, but neither side is ready to set a trial date, attorneys said Thursday.

Orange County has alleged that Merrill Lynch sold county-owned securities in violation of state law shortly after the county’s bond pool was forced into bankruptcy.

On Thursday, U.S. Bankruptcy Judge John E. Ryan set a May 16 status conference for the case.

Compiled by Shelby Grad, with Mimi Ko, Alan Eyerly, Jeff Bean and Greg Johnson.