California, Budget Deficit | featured news

California's controller said on Wednesday that he would have to issue IOUs in a week if lawmakers can't quickly solve a $24 billion budget deficit, and the state's treasurer plans to tap a reserve fund to meet debt service costs.

The White House on Tuesday dashed hopes that the federal government would help California overcome a mammoth budget crisis that has brought the state dangerously close to an economic meltdown, saying the state will have to solve the problem on its own.

Gov. Arnold Schwarzenegger vowed Wednesday to let California government come to a "grinding halt" rather than agree to a high-interest loan to keep the state afloat if he and the Legislature do not close the yawning budget gap in coming weeks.

Residents relish their role in the lawmaking process, but they share the blame for the state's severe dysfunction. Californians are well known for periodic voter revolts, but on Tuesday they did more than just lash out at Gov. Arnold Schwarzenegger and the Legislature over the state's fiscal debacle.

California holds a special election on a series of measures to plug its gaping budget hole amid warnings of deep spending cuts.

Its deficits ballooning and its lawmakers intransigent, California appears to be headed off the fiscal rails.