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California Versus Alaska

Map of California
AP
Map of California

California is about to set a record for not having a budget. Already, physicians and hospitals are owed $1 billion in overdue Medi-Cal payments, and the state could actually run out of money by the end of the month.

Facing a $15 billion deficit, Gov. Arnold Schwarzenegger, who once seemed to be the strongest man in the world, can't seem to bring together Democrats, who want to raise $10 billion in taxes, with Republicans, who want to continue trying to borrow billions of dollars matched with deep cuts to close the budget gap.

Gov. Schwarzenegger has offered what he calls a compromise, going back on his own no-tax pledge by trying to stitch together cuts and budget reforms with what he calls a "temporary" three-year sales tax hike.

The Governor today appeared at a local hospital encouraging citizens to call their legislators to get a deal done. He has mocked state senators who continue to collect a per diem in Sacramento while getting nothing done. You'll hear me ask him what sacrifices he and his office are making during this time (answer: none, "it's not our fault" is his basic message).

California is the only state in the Union without a budget, and, as of tomorrow, it will set a new record for time without a plan. Listen to the first video clip to hear what the Governor had to say about the budget.

SARAH, SARAH PALIN?

As you heard him say, the Governor is refusing to leave California until he has a budget. This meant he had to skip the Republican National Convention. So I asked him what he thought of Gov. Palin's speech last night (second clip). By the way, it's not lost on him that Alaska, unlike California, actually has a budget surplus.

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  • Based in Los Angeles, Jane Wells is a CNBC business news reporter and also writes the Funny Business blog for CNBC.com.

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