Officials from struggling Calif. county hopeful about getting loan after discussion with state

SACRAMENTO, Calif. – The leaders of a rural Northern California county that has been considering bankruptcy say they're hopeful about their request for a multimillion dollar loan after discussions with state officials.

Counties and cities throughout California have seen their tax revenue plunge because of the recession. But Modoc (MOH'-dahk) County is in trouble because it was improperly funding its hospital using money intended for other purposes.

Dan Macsay, chairman of Modoc county's board of supervisors, says no decisions were made Friday about whether the county will get a loan from the state.

But a spokesman for the state Treasurer Bill Lockyer says legal questions have been resolved and state officials are more confident that the County can repay a loan.

The county is seeking two loans of $4 million and $12.5 million.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

SACRAMENTO, Calif. (AP) — The leaders of a rural Northern California county that has been considering bankruptcy say they're hopeful about their request for a multimillion dollar loan after discussions with state officials.

Counties and cities throughout California have seen their tax revenue plunge because of the recession. But Modoc (MOH'-dahk) County is in trouble because it was improperly funding its hospital using money intended for other purposes.

Dan Macsay, chairman of Modoc county's board of supervisors, says no decisions were made Friday about whether the county will get a loan from the state.

But a spokesman for the state Treasurer Bill Lockyer says legal questions have been resolved and state officials are more confident that the County can repay a loan.

The county is seeking between $4 million and $12.5 million.

(This version CORRECTS that the county seeks two loans totalling $16.5 million, not total between $4 million and $12.5 million.)