Bottom Falls Out of California Budget

With Governor Arnold Schwarzenegger’s comment yesterday that the California budget is $20-billion "out of whack", the bottom has officially fallen out on California state finances. Deficit estimates have escalated radically over the last year, from $9-billion to the current $20-billion figure.

What does all this mean? It means that Californians are going to see big budget cuts over the next few months, and, more broadly, it means that worries over state default are going to rise.