You don’t really need to read the article. California is still screwed. The key piece of new information is that March is an effective deadline for either a wheelbarrow full of money from the federal government or a set of program cutbacks. If March comes and goes without either option (which, let’s face it, has about a 50% chance of happening), then California enters into a budgetary crisis that is worse than before. I’d rate it a “Fox” on an arbitrary scale. If I rated it a 9 or an “orange,” you might think my scale had some normative limits. You’d be mistaken. When the state government talks about shutting down all functions, then says “this crisis is worse,” then says “this crisis is even worse,” you stop caring about scales and wonder what options even exist (you also worry about the consequences of said options, but we’ll leave that for another night).

I see three options:

1. After entering the next crisis, more bailout money comes, and the can is kicked down the road again

2. The state works with the federal government to devise a way for a state to declare bankruptcy

3. The sales tax rises 3 percentage points, and the marginal tax rate on the rich rises significantly

The state is out of money. The state needs money. There are very limited sources for getting money. Either it gets the money, or it eliminates the need for so much money. Since it is still possible that the state runs out of money even after a complete shutdown, I only see bankruptcy as a means of eliminating the money need. I would put the best odds on option 3 being tried, then option 1, and then option 2. Option 2 only really becomes probable if the California economy has significantly further to fall.