ORANGE COUNTY IN BANKRUPTCY : DAILY DEVELOPMENTS : TRANSPORTATION

The Orange County transportation authority--the largest contributor to the paralyzed investment fund--said that bus and rail service will continue, as will most major projects. But the authority has postponed a key Interstate 5 widening project in Anaheim.

WATER

The Orange County Water District asked a bankruptcy judge for permission to withdraw from the county’s shriveled investment fund. Without the money, the district said, it is in danger of shutting down.

PUBLIC REACTION

Most residents are frightened about the impact of the crisis and blame government officials as well as Wall Street firms for the financial collapse, an Orange County Times Poll found. Four in 10 residents said they were “very angry” about the actions of local officials that preceded the county’s financial crisis.

STATE STUDY

California Senate leader Bill Lockyer (R-Hayward) announced formation of a special committee to study the causes of the bankruptcy. The committee will begin meeting next week.

SPECIAL TREASURER

Tom Daxon, the former state auditor of Oklahoma, was named by county officials to step in as the county’s special treasurer. The county also hired the accounting firm of Arthur Andersen & Co. to work with Daxon.

SCHOOLS

State and local education officials came to a tentative agreement with the county to segregate all money earmarked for public schools from the county treasury. But administrators in individual districts said they remain worried about making payrolls and paying bills. Schools were expected to feel the biggest hit because so much of their money was tied up in the Orange County portfolio.