The Governator Requests $7 Billion Federal Bailout for California

California Gov. Arnold Schwarzenegger "warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks." Schwarzenegger's plea comes as the state is "close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans":

The warning comes as California is close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans that it typically relies on to remain solvent.

The state of California is the biggest of several governments nationwide that are being locked out of the bond market by the global credit crunch. If the state is unable to access the cash, administration officials say, payments to schools and other government entities could quickly be suspended and state employees could be laid off.

The Atlantic's Marc Ambinder calls Schwarzenegger's request "easily the biggest story of the day."

Update: The New York Times has more on the fiscal and financial struggles that many states are facing.