ORANGE COUNTY IN BANKRUPTCY : Delegates Get First Glimpse at Federal Relief Proposal : Aid: Outline calls on Congress to exempt county from costly mandates, to hand over El Toro Marine base and to ease regulations blocking sale of John Wayne Airport.

WASHINGTON —  Five months after declaring bankruptcy, Orange County officials are seeking relief from costly federal regulations in order to save cash, while also exploring whether the county can make money by selling John Wayne Airport and the El Toro Marine Corps Air Station.

During a Capitol Hill brainstorming session Thursday, Jim McConnell, the county’s lobbyist in Washington, presented members and staffers of the Orange County congressional delegation with a rough outline of bills that could help the county recover from the bankruptcy.

The package--the first major attempt by Orange County to seek federal relief--was presented on a day when state lawmakers finished voting on several bills designed to alleviate Orange County’s cash crunch. The proposed federal legislative package, seen as long-term remedies for the municipal bankruptcy, covers three general areas:

* Exempting the county from federal mandates--services the county is required to provide but without federal funding to do so--and removing requirements that the county pay a share of federally funded projects.

* Transferring the El Toro Marine Corps Air Station to the county at no cost and eliminating the Pentagon’s base closure process so the county can quickly reap the financial benefits.

* Removing some legal and regulatory obstacles that now make it difficult for the county to sell John Wayne Airport.

The package does not include any request for emergency funds should county voters fail to approve a half-cent sales tax measure on the June 27 ballot and default on the more than $1 billion in bonds coming due this summer.

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Rep. Christopher Cox (R-Newport Beach), a member of the House leadership team, recently met with county officials and encouraged them to seek help from Congress. Following Thursday’s strategy session, he said Orange County should have “excellent chances” of getting waivers from federal rules, given the new Republican majority in the House.

The question from a political and practical standpoint, according to some who attended the meeting, is whether the money to be gained from removing federal mandates is worth the effort.

One possible remedy, for example, calls for the county to be exempt from the Fair Labor Standards Act, so that hourly employees who work more than 40 hours a week can be compensated with time off from work instead of overtime pay.

McConnell said an earlier estimate showed a savings of $9.5 million per year for a work force of 18,000.

“That could save several million dollars per year,” he said. “But on the other hand, does that cause problems with the unions--not on the Orange County level but on the national level--and the unions getting Democrats to oppose it? Is it worth the effort when there could be other things that you could do that might actually net you more bang for the buck?”

Current federal rules also jeopardize the county’s ability to provide social services in this time of bankruptcy, McConnell said, because some programs require the county to pay a share of the cost--money the county no longer has. Because of recent layoffs, McConnell said, the county may be breaking federal rules requiring a certain number of caseworkers per clients served.

In the two largest programs handled by the county Social Services Agency--Aid to Families with Dependent Children and food stamp distribution--the county could save $11 million if it were not required to supplement federal funds, county officials estimated.

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Rick Dykema, the legislative director for Rep. Dana Rohrabacher (R-Huntington Beach), said after the meeting that staff “resources might be better spent on the bigger items” such as the transfer of the El Toro base.

The proposed El Toro transfer already has been introduced in a bill sponsored by Rep. Ed Royce (R-Fullerton), and could be moved to the fast track by attaching the measure to upcoming budget bills.

But the idea is not without political peril because of dissension over whether the Marine base should become a commercial airport after it closes in 1999.

An even stickier option, because of its legal and bureaucratic complexity, is the proposal to allow the county to sell John Wayne Airport.

“It’s a little more complicated, especially if you want to sell it to a private concern,” Dykema said, because among the federal guidelines are rules dictating that proceeds from the sale be applied to aviation uses, not county profit.

Dykema said that obstacle could be removed if the airport was purchased by the Orange County Transportation Authority, which is considering the idea.

Cox said current airport ownership laws are based on the standard that airports are publicly owned and operated, with no precedent for a government to sell a facility to a private interest. It will be difficult, he added, but “I don’t think it’s insurmountable.”

Cox also said the sale of John Wayne Airport would have to be coordinated with the planning of El Toro to avoid competition between both sites if El Toro is designated an airport.

Times staff writer Lisa Richardson contributed to this report.