ORANGE COUNTY'S HOLE grows deeper. California's bankrupt poster child tried raising funds with a 1/2% sales tax hike. Voters rejected it on June 27. The debt market wasn't much kinder: Investors boycotted the county's $155 million bond issue backed by the Industrial Bank of Japan's letter of credit, forcing underwriter Goldman Sachs to increase the yield by half a percentage point. As a result, the county may have to default on $800 million in debt due this summer. Officials are trying to avert disaster by usurping tax revenues intended for its cities, schools, and special districts. But "there is not a hundred cents on the dollar [bankruptcy] solution from this day forward," said Paul Nussbaum, a top county adviser.

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