The Gilded State

Someone ready a bailout: California’s chief financial officer warned yesterday that the state will go broke in two months. His comment came after talks between Governor Arnold Schwarzenegger and Democratic leaders failed to make any progress toward closing the state’s $42 billion budget shortfall that is projected through June 2010. Democrats sent Schwarzenegger an $18 billion package last week that both cut spending and raised taxes, but Republicans in the legislature are opposing it because Democrats passed it with a simple majority, rather than the normal two-thirds vote that is needed to raise taxes. Democrats are blaming Schwarzenegger, while Schwarzenegger is casting a pox on both party’s houses. “The Democrats want to block cuts to state government spending, and the Republicans want to block revenue increases because they have signed pledges to protect special interests," Schwarzenegger’s spokesman said in a statement. "Legislators were sent to Sacramento to fix problems, but now what they're doing is making the situation worse."