This budget wrangling was just a sideshow, the problem is the real economy. The growth over the last ten years was a classic Potemkin false front and as the facade falls away, it exposes the rot underneath. From the Wall Street Journal:
California's legislature approved a plan Thursday morning to close the state's $42 billion budget deficit through steep cuts and new taxes, after state leaders corralled the last Republican vote needed to end a 15-week partisan impasse that has battered an already-crippled state economy.
State Sen. Abel Maldonado provided the required "aye" vote after senate leaders met his demands that certain state-government reforms be added to the budget proposal and that the plan be stripped of a gas-tax increase....
...The budget calls for California to generate up to $13 billion in revenue by raising sales taxes one percentage point and adding a surcharge on state income taxes, among other steps. One feature represents a remarkable capitulation for Mr. Schwarzenegger: an increase in the vehicle-license fee from 0.65% to 1.15%. The governor won his post in 2003 after campaigning to cut back the so-called car tax, which he did soon after taking office.
The proposal calls for the state to slash $15 billion in spending, including $8.6 billion from education. To save $1.4 billion from payroll costs, the government will eliminate two state holidays, change overtime rules and furlough workers at least one day a month. The remaining deficit was to be closed mostly through borrowing or with money from a federal-stimulus package....MORE