July 1st, 2011, 11:13 am
posted by BRIAN JOSEPH, Sacramento Correspondent
Gov. Jerry Brown signed Thursday evening the trailer bills associated with the state budget, meaning the $48 million grab of Orange County money is now officially law.
The questions about the action, however, aren’t soon to dissipate.
As the Orange County Register reported on Wednesday, local lawmakers believe the taking violates existing law. The Brown administration, on the other hand, thinks it’s legal.
The argument probably won’t end anytime soon. It’s a confusing issue, but we’ll try to explain it as best we can.
The trailer bill, Senate Bill 89, takes $48 million annually in state vehicle license fee money that the county uses to pay off the remaining debt from the 1994 bankruptcy and redirects it towards the governor’s realignment plan. Every county receives some vehicle license fee money from the state.
Following the bankruptcy, the state agreed to dedicate Orange County’s vehicle license fee money to repaying its bankruptcy debt. That dedication was necessary to ensure investors would buy the bonds: They wanted to see that a solid source of revenue was available to pay them back.
This arrangement worked for years. Then, in 2005, Orange County refinanced its debt. Around the same time, the administration says, the county stopped repaying its bankruptcy debt directly with vehicle license fee money. Instead, the administration says, Orange County took the vehicle license fee money, commingled it with other county funds and then used those commingled funds to pay down the debt.
The administration’s position is that the vehicle license fee money is no longer “pledged” to repay the county’s bankruptcy debt. As a result the administration believes the money is fair game to take.
And the administration does believe it’s fair. The administration says Orange County got a higher share of vehicle license fee money than other counties to help it pay off its debt.
Orange County officials, as you might imagine, have a different take on the situation. First, they say, the money is still pledged. They point to California Government Code section 25350.6, which states that pledge of funds to repay the Orange County bankruptcy debt remains in effect even if the debt is refinanced.
Second, OC officials say the county’s take of other state funds, specifically money from the Educational Revenue Augmentation Fund, was proportionally decreased in 2004-05 because of the higher vehicle license fee monies it received for the bankruptcy debt. In other words, the county says it didn’t actually net extra money from the state as the administration claims because it received less from another another state fund.
This, obviously, won’t be the end of it. The issue ultimately could be decided in court. Stay tuned.
The questions about the action, however, aren’t soon to dissipate.
As the Orange County Register reported on Wednesday, local lawmakers believe the taking violates existing law. The Brown administration, on the other hand, thinks it’s legal.
The argument probably won’t end anytime soon. It’s a confusing issue, but we’ll try to explain it as best we can.
The trailer bill, Senate Bill 89, takes $48 million annually in state vehicle license fee money that the county uses to pay off the remaining debt from the 1994 bankruptcy and redirects it towards the governor’s realignment plan. Every county receives some vehicle license fee money from the state.
Following the bankruptcy, the state agreed to dedicate Orange County’s vehicle license fee money to repaying its bankruptcy debt. That dedication was necessary to ensure investors would buy the bonds: They wanted to see that a solid source of revenue was available to pay them back.
This arrangement worked for years. Then, in 2005, Orange County refinanced its debt. Around the same time, the administration says, the county stopped repaying its bankruptcy debt directly with vehicle license fee money. Instead, the administration says, Orange County took the vehicle license fee money, commingled it with other county funds and then used those commingled funds to pay down the debt.
The administration’s position is that the vehicle license fee money is no longer “pledged” to repay the county’s bankruptcy debt. As a result the administration believes the money is fair game to take.
And the administration does believe it’s fair. The administration says Orange County got a higher share of vehicle license fee money than other counties to help it pay off its debt.
Orange County officials, as you might imagine, have a different take on the situation. First, they say, the money is still pledged. They point to California Government Code section 25350.6, which states that pledge of funds to repay the Orange County bankruptcy debt remains in effect even if the debt is refinanced.
Second, OC officials say the county’s take of other state funds, specifically money from the Educational Revenue Augmentation Fund, was proportionally decreased in 2004-05 because of the higher vehicle license fee monies it received for the bankruptcy debt. In other words, the county says it didn’t actually net extra money from the state as the administration claims because it received less from another another state fund.
This, obviously, won’t be the end of it. The issue ultimately could be decided in court. Stay tuned.
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