[quote=pri_dk][quote=no_such_reality]The more likely scenario, and hopeful scenario, is that California defaults on a bond payment.[/quote]

CA cannot default on bond payments until they stop paying for everything else. It’s in the state constitution. The legislature and Governor don’t have a choice: They cut the interest checks first.

I think that the chance that interest payable during any year could exceed tax revenues is close to zero. The state is not *that* broke.

How much is left for everything else (payroll, welfare, and whatever) is the real question.[/quote]

Sorry pri_dk, my understanding was the same as yours in a previous post “The state constitution requires that schools get get priority followed by general-obligation bondholders. ”

So essentially, ground zero comes when Education and the bond holders cannot be made whole without non-trivial cuts to Education. Also, the bond holders will get nervous on future bonds when it becomes clear that there a fundamental structural problem that cannot be address. The solution to make them whole involves taxes which in turn shrinks the pie.