California, the world’s eighth-largest economy, faces a $20 billion hole in the budget during the next 17 months. With its cash dwindling, the government may need to issue IOUs for the second straight year unless Governor Arnold Schwarzenegger and two-thirds of the Legislature can agree on a fix. Once the budget is balanced, the state is poised to sell billions of dollars of bonds after flooding the market with $36 billion in debt last year.
“This is a political mess,” said Naehu. “The state is not out of the woods. In fact, one could argue they are in even worse shape than they were before.”
http://www.bloomberg.com/apps/news?pid=20601109&sid=aMKFA.QZ_gBw&pos=12
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