BBC News
Four years ago, the state of California was on the brink of bankruptcy. It had been hit hard by the financial crisis. Unemployment was higher than the national average, as was the rate of mortgage repossessions. Tax revenues were in steady decline, while expenditure had ballooned. California's budget deficit stood at $11.2bn (£7bn) and in the state legislature Republicans and Democrats were at loggerheads over whether to cut services or raise taxes. A budget was finally signed off by Governor Arnold Schwarzenegger three months late. That included tough measures. State employees were asked to stay at home without pay for two days each month to reduce expenditure. State offices were closed on the first and third Friday of each month. But the situation did not improve. By the middle of 2009, the state government began issuing IOUs to meet its short term financial obligations. The rating agencies downgraded its bond-rating. Yet four years on, California is projecting a budget surplus of more than $1bn for the 2014-2015 fiscal year.
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