I just have three words for you: Revenue Anticipation Notes. And yes, it could turn out to be a big deal. The state of California is selling $7 billion worth of these short-term notes today to essentially pay the bills until tax revenue comes in. That's almost five times more than last year and reflects the fact that when folks stop buying and selling homes, there's bound to be a big dropoff in the amount of money coming into state coffers. Just to give you an idea, September's receipts missed state budget projections by more than $300 million. "Without the ability to make mid-year corrections, any rough spots in the General Fund will make next year’s budget all the more challenging," said Controller John Chiang the other week. In the world of municipal bonds, today's sale is huge - the largest short-term offering since a $7.4 billion issue by Texas in 2003. "Today's short-term borrowing is the tip of the iceberg,'' Richard Larkin, a municipal bond analyst at money manager J.B. Hanauer & Co., a Parsippany, told Bloomberg. "This stress will probably play out for two years or more.'' He says that this kind of borrowing would suggest a looming budget crisis. Here's more from Bloomberg:

"If you look at what's going on in the state in terms of the budget and the revenue projections and the revenue collections over the last few months, things are tighter than they have been in the last few years,'' said Emily Raimes, who analyzes California for Moody's in New York. From 1991 to 1994, when an economic slowdown curbed revenue, short-term borrowing rose to $9.5 billion from $5.6 billion. The rating fell to A1 at Moody's and A at S&P from AAA, the highest possible. Republican Pete Wilson was governor then.