The long-awaited compromise won't raise taxes but its service cuts are unlikely to make it popular.
As a deal stalled over school funding cuts, warnings sounded about rising state debt and falling bond ratings.
As lawmakers edge closer a budget deal, teachers' unions, business groups, and even the governor hit the airwaves with their demands.
Major banks say they won't honor IOUs that the state has issued. That could increase pressure on lawmakers – but it might not be the decisive factor.
Gov. Schwarzenegger stakes his political legacy on fiscal reform without tax hikes.
Some analysts say her political career is over. Others say she will be in a better position now to run for national office.
Economists worry that the budget deficit could hurt the state just as it has begun showing signs of recovery.