California Facing Immediate Bankruptcy
California Gov. Arnold Schwarzenegger said on Thursday the state "faces insolvency within weeks" and he will put new policies on hold until there is a deal to close the budget gap, which will top $40 billion over the current and next fiscal year. "It doesn't make any sense to talk about education, infrastructure, water, health care reform and all these things when we have this huge budget deficit," Schwarzenegger said in his annual state of the state speech. The Republican governor and Democrat-led legislature are at adds over how to fill the current year's budget shortfall and are poised for a struggle to balance the budget for the state's next fiscal year, which begins in July. "The reality is that our state is incapacitated until we resolve the budget crisis," Schwarzenegger said. "The truth is that California is in a state of emergency," he added. "Addressing this emergency is the first and greatest thing we must do for the people. The $42 billion deficit is a rock upon our chest and we cannot breathe until we get it off." - Reuters
William Thomas Cain/Getty Images