Because the economy is so bad for everyone that the financial crutches the state normally uses to get by without a budget are shaky this year at best.
California's budget is $15.2 billion in the red. Democrats want to fix that with tax increases. Republicans are ready to ax state programs. That's sure to cause plenty of political wrangling this summer and in the meantime - a lot of Californians will be paying the price.
Some state agencies, like healthcare clinics, normally use private loans to get by during budget stalemates. But because of the mortgage crisis this year - they're going to have a tougher time getting those loans. The state may end up looking for short-term financing from investment banks, but those interest rates will make that deficit even worse.
"It's not going to get better if the state of California starts borrowing more and more money. And, that's exactly the solution that the governor and the Republicans have offered. They want to borrow more and pay it back next year. That is precisely the problem that we've had over the last few years that got us into this disaster today," said State Senate President Don Perata.
California already has the second-lowest credit rating among states in the country and some economists say a downgrade could be coming.
To make matters worse is the severity of the wildfire season. The state is paying millions of dollars to fight the ones we've already seen and it's still quite early in the season.