The case of the disappearing VLF funding in Orange County may have taken a while to be discovered, but it may find a quick resolution as the non-jury trial was set for Tuesday. The purloined funds represent about 10 percent of the County’s general fund budget.

The case began in 1994, when the County declared bankruptcy. As a way to provide some confidence to investors, the County dedicated its VLF money towards the interest and principal payments. That scheme worked until 2005, when the County refinanced some of its debts and no longer needed the revenue stream.

But the state kept sending the money, about $50illion per year. And the payments continued until budget solutions mandated closer budgetary scrutiny. So last year, the State cut off the revenues and redirected them to their own budgets. That’s when the County withheld about $73.5 million, saying it was the equivalent of what other Counties kept from property taxes under terms of a deal in 2003.

Read the full story at the OC Register.