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Butte County Approves Bailout to Avert Bankruptcy

September 19, 1990

OROVILLE, Calif. (AP) _ Butte County accepted an $11.1 million state bailout to avoid becoming the first county in the nation to declare bankruptcy but warned that more danger lies ahead.

The Board of Supervisors voted 3-2 Tuesday to accept Gov. George Deukmejian’s emergency offer of money to balance the county’s $155 million budget.

The tax base in mostly agricultural Butte in Northern California is buckling under costly welfare and health care programs. In June, voters rejected several tax increases.

County officials said the bailout could allow for minimal wage increases for county workers and for the hiring of more than a dozen sheriff’s deputies.

The lack of revenue had forced the elimination of 23 jobs at the sheriff’s department, libary closings, longer delays at county offices and fewer firefighters. Because of a four-year freeze on salaries, 15 workers in Butte’s welfare department qualify for benefits themselves.

However, county administrative officer Will Randolph said Butte County faces a $25 million deficit in 1991.

″We’re only putting off the inevitable,″ he said.

The bailout agreement culminated weeks of acrimonious negotiations between the county and the governor’s office. The supervisors had earlier said they could not accept less than $14.1 million to balance the budget.

County authorities maintained they had no money to carry out state-ordered programs. The governor suggested the county had failed to manage its money properly.

Even before the plan won approval, Butte County officials cautioned that another budget shortage is looming and urged other strapped counties to declare bankruptcy as a protest against the state.

″We need to put together some kind of plan for the ABCs of county survival,″ Supervisor Haskel McInturf said. ″I would call it the Alliance of Bankrupt Counties.″

Christina Cutshaw, spokeswoman for the County Supervisors Association of California, said that ″there are at least 15 counties right behind Butte″ facing hardships aggravated by state-mandated programs, annexations, incorporations and big increases in jail operations.

The governor agreed to defer more than $6.3 million owed the state for fire protection, postpone the state’s demand for payment of a $2 million matching share for a new jail, and grant $1.15 million in cash.

The bailout also calls for the county to raise $1.65 million by increasing fees, including those involving property tax collections and jail booking.

Butte County ranks last among the state’s 58 counties in the amount spent per capita on local government. County officials say 85 percent of their budget is locked into existing programs mandated by law, such as firefighting, welfare and health care for the poor.

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