For more detail on why businesses and entrepreneurs are fleeing the state, one need look no further than Richard Rider's latest update of Breaking Bad: California vs. other states.
California has 12% of the nation’s population, but 36% of the country’s TANF (“Temporary” Assistance for Needy Families) welfare recipients [...] America’s top 600 CEO’s rank California “the worst place in which to do business” for the fifth straight year [...] California residential electricity costs an average of 30.1% more than the national average [...] Consider California’s net domestic migration (migration between states). From April, 2000 through June, 2008 (8 years, 2 months) California has lost a NET 1.4 million people [...] As taxes rise and jobs disappear, we lose our tax base, continuing California’s state and local fiscal death spiral.
That's just a sampling. Click on over to read the whole apocalyptic list.
The last few years, Schwarzenegger and the Democrats have been able to fake holding the budget together with accounting gimmicks and borrowing. How much longer that can continue is an open question -- it's already lasted longer than I expected. But the state has also had help from an enabling Congress: first with billions in unemployment insurance loans and then with "Build America Bond" subsidies. Now the UI bill is coming due and the BAB scam is over. And the new Republican Congress looks very unlikely to give more handouts to the worst-managed (and very Democratic) state. With no more free money from Congress, there remains one huge unaccountable, unelected potential sugar daddy. Will the Dirty Fed step in to buy California munis?