The state controller has just made plain that he'll start paying California's bills with IOUs next Thursday if the legislature and governor don't agree on how to fix the $24 billion budget shortfall by then. (This is bad, but not as bad for those receiving the IOUs as it seems. The IOUs must be paid back with 5 percent interest. Your blogger is thinking of asking his bosses at the New America Foundation to pay him in IOUs. How 'bout it, Mr. Coll?).

With the state on the brink, it's not clear how this movie ends. One new narrative was offered by Republican GOP contender Tom Campbell, a former director of finance for the state, during a talk at the Los Angeles Area Chamber of Commerce.

According to Joel Fox's report in Fox & Hounds Daily, Campbell suggested a federal judge could end up with huge control over state finances.

Fox reports: "Campbell painted a dark picture of what might happen if the state runs out of cash in July. He told the Chamber audience a likely scenario is that a federal judge might intervene to demand California pay its bills.

"While acknowledging that the state cannot go bankrupt, Campbell argued that a vendor with an unpaid invoice from the state could sue in Federal Court for breach of contract. Campbell's prediction is the judge will order California to sell its assets to pay its debt to vendors. One problem: Under the Economic Recovery Bond measure California voters approved during a previous budget crunch; if state assets are sold they must first go to cover the bonds. Since $8.6 billion is still owed on the bonds, that means the state must first sell assets equal to that amount before securing a dime to satisfy the court's judgment for any vendor who sues."

What a mess that would be. Your blogger still thinks the feds will intervene before things go that far. But in California, you never know.