Tax receipts are plummeting because of the recession, leaving the state more than $20 billion short of what it needs to pay the bills over the next several months, according to Legislative Analyst Mac Taylor. And Taylor warned that borrowing might not be possible because California's credit rating is so low (though there's been no trouble attracting investor interest in recent bond sales). From the LAT:

The budget package that Gov. Arnold Schwarzenegger signed into law in February, averting an earlier cash crisis, was intended to keep the state solvent through June of next year. But the deterioration of the economy quickly knocked that spending plan out of balance. The problem will grow worse if voters reject five budget-related matters on the May 19 special election ballot, as polls show they are inclined to do.