June 29, 1995 in Nation/World

Orange County Outlook Dreary

Compiled From Wire Services

Life in Orange County seemed thoroughly routine on Wednesday. But the appearance of normalcy masked deep doubts about the bankrupt county’s future after voters on Tuesday rejected a proposed sales tax increase.

Orange County now must search for other ways to pay off the crushing debts that led it into bankruptcy last December.

Some county leaders predict harsh cuts in services. Fierce battles lie ahead over which assets, the John Wayne Airport among them, the county might be able to sell. Citizens groups are pushing for a drastically downsized county government structure. And, a state takeover of most county operations looms as a possibility.

And if Orange County defaults on $800 million in bonds coming due in July and August - something most analysts say now seems unavoidable - borrowing for government units across California could become more expensive.

Sixty-one percent of voters in the deeply conservative county voted against raising their sales tax by half a percentage point, a plan put forward by county administrators as the surest way to repay the bonds.

The resounding defeat resulted from voter outrage at county leaders, who permitted the former county treasurer to gamble away $1.7 billion in public funds in risky investments.

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