California is in a state of pain.
But at least the state has some room to maneuver.
This week State Controller John Chiang said receipts in January were $480 million above estimates, and it looks like the state will not have to delay income tax refunds this year.
Today California Treasurer Bill Lockyer is holding a much-advertised $2 billion bond sale to help fund voter-approved infrastructure projects, and in a sign of growing confidence that the Golden State will not default, investors are pouring in.
Part of the reason for that confidence is the Legislature has given Chiang flexibility in doling out cash.
On the losing end of that flexibility may be cities and counties, as the state could delay monies owed to those smaller governments in an effort to calm any concerns by bondholders.
That's not good for Los Angeles.
The City of Angels is facing a $200 million budget deficit in the current fiscal year which will grow another half billion next year. The city will owe $399 million next year just in debt service, and it faces about $6 billion in underfunded pensions and healthcare costs for its retired employees.