Bankruptcy is the inability to service one's debts. Bankruptcy law allows persons or businesses to continue functioning financially despite being unable to service their debts.
Bankruptcy law probably does not apply to the State of Kalifornia although the processes that would take place would be surprisingly similar.
Let's imagine for a moment that the tripling of the car tax and the so-called "deficit" bonds are ruled illegal by the courts.
Very soon, the general fund from which the state makes payments will have a balance at or below zero. There may be a short-term credit line available, but soon even that would be exhausted.
At some point, a check drawn on the funds of the State of Kalifornia will be presented by a bank for a transfer payment and there will be no way to make the transfer. At that moment, the bank holding the "paper" will either have to treat the paper as money or it will have to refuse to honor the paper and return it to the depositor.
Imagine that the depositor is a school teacher. The teacher's union would then go to court and ask the court to force the state to cover the payment. The only way for Kalifornia to cover the payment is to increase revenues by a tax increase or to take the money from someone else who holds paper issued by the state.
At this point the teacher's union would be asking the court to either order the state to raise taxes or to decide which of several competing interests shall receive what little money the state has.
Now it gets really interesting...
If the courts refuse to rule, then the state government will get to decide who gets paid and who doesn't and the matter stays in the political arena.
If the courts mandate that taxes be raised, then the courts would be usurping the power of the legislature. I doubt that they would try this.
If the courts try to get into the business of deciding who gets paid and who doesn't, then they are once again usurping the power of the legislature, except in this case they may be able to make judgements regarding whether the payments in question are mandated by the state constitution, allowed by the state constitution, or possibly unconstitutional because the legislature in fact had no power to legislate in some matter.
One interesting area might be the utilities. The court may find that the consitution does not require that utilities be regulated by the state. Payments to the regulatory agencies might be ordered halted in favor of teacher's salaries.
The courts may find that the legislature has no power to subsidize the shrimp industry and payments for shrimp harvesters will stop.
I think that I recently read about a successful challenge to the Coastal Commission. Perhaps the court will rule that the legislature has no power to regulate what landowners may do with their land simply because the land is adjacent to a seacoast.
The courts might decide that the state has no power to maintain a registry of the guns owned by law-abiding citizens. They might order the cessation of payments for such a registry. [ Hey, it's my scenario...]
The courts might just limit themselves to deciding which items are required by the constitution and let everything else be decided by the government. Maybe the teachers will get paid and everybody else will be forced to go to court in order to get paid.
I welcome anyone else's scenarios regarding the coming mismatch between income and expenditures in the state. I would be quite disappointed if Arnold manages to make compromises allowing the continuation of even 75% of the nonsense that goes on in this state. Even if it is "for the children".