1. The problem is that the State is taking the position (so far) that opting out of A still requires B.
Yes, I am in agreement with the State's position.
2. My position is that such an interpretation BY THE STATE, is absurd since the B option was always available to the Ass'n without nay need for any vote.
On this I will refer you back to my previous answer:
So before the new law, a member could force the assoc. to get a permit for A or B. After the new law, if an assoc. opts out of having to get a permit for A, then my thought was that a member could only force the assoc. to get a permit for B. But you are correct in your analysis because under the old law an assoc could choose option B even if pushed in a corner to comply.
3. Therefore the only rational explanation remains that it was meant to include B in the opt out.
I do not know sufficient information about the framers' intentions to go as far as saying this is the only rational explanation. My point is that the new law is not redundant or surplus since a difference does exist [due to the passage of time] [and the act of opting out] between the new law and the old law as to what options the assoc has to cure a default under its duty to apply for a permit by 2019. After the new law and after opting out, it may only apply for a permit for B; not A
If you believe this is an absurdity, then the remedy is to file a declaratory judgment action in court and argue your case accordingly. The courts are assigned the responsibility of interpreting the legislation.
Q. Would it therefore be right to argue that the only proper interpretation of the opt out law was that it was meant to include both options A and B?
ANSWER: It is not clear since there does exist a difference between how the association is treated under the old law vs. the new. Because of the existence of this difference it cannot be said that the new law was created for "no apparent reason" (i.e. your definition of absurd).
Q. Is there any case law on the point in federal or state cases?
ANSWER: While there may be cases showing instances where a court found a particular statute or legislation to be absurd, each such statute would have to go through an independent analysis by the way of a declaratory judgment action where in parties often introduce the legislative history of that statute to help the court assign a proper and contextual legal meaning.