CA already has one of the lowest bond rating. If they float more issues in the market, the only way they will be able to pay off is by offering a high interest rate. The most insane and saddest thing of this situation is that unlike using a bond issue to build something that may generate revenues, this will only go into the general budget to fund govt agencies. In other words, not a dime will go into economic expansion but to support the present bureaucracy. This is exactly why third world countries never get out of debt.
There will be only two ways to get out of it. The state can default, at which point forget about any future bond issues. Or, CA can start begging the federal govt for debt relief painting the spectre of hungry children running naked on the streets, no cops to protect the innocent, etc etc. At that point, it will be a tax increase for the whole country. The solution is that things are so bad, this is the perfect opportunity to take a sledge hammer and rip the state budget. It will be classic. Arnold - the real-life Terminator.