Gov. Arnold Schwarzenegger says the $42 billion deficit is a "rock upon our chest and we cannot breathe until we get it off." From AP:

"Let me tell you, I have big plans for this state. They include action on the economy, on water, environment, education, and health care reform, government efficiency and reform, job creation, and the list goes on and on," Schwarzenegger said. "But our first order of business is to solve the budget crisis."

Schwarzenegger's address was unusual for its brevity, its lack of big ideas and even the time slot in which he scheduled it. Governors typically use their annual address to the Legislature to lay out their major policy goals for the coming legislative session. In years past, Schwarzenegger has promoted bold initiatives regarding health care, infrastructure, education and water policy. The speech is typically given to the Legislature in early evening and is sometimes carried live on local television stations. This year's event was a spartan affair, with the speech starting at a little past 10 a.m. and concluding in about 12 minutes.

State Controller John Chiang has warned that California will run out of cash by late February unless a budget deal can be cut. That means, among others things, IOUs as tax refunds.