California may soon have a budget and the ability to repay the IOUs it started issuing on July 1. The damage this budget stand-off has caused to California's bond rating could take a year or more to fix. California's bonds are just two steps away from junk status.

Lawmakers must vote on 31 bills to complete this task and many of those bills include severe cuts to the state budget. While Governor Arnold Schwarzenegger announced a tentative deal on Monday night, the devil is in the details. Those details must now be voted on department by department. The legislators must find a way to fix a $26.3 billion budget shortfall.
As of 3:30 am eastern time, legislators had voted on only half of the bills and they're avoiding the most controversial bills that proposed deep cuts to some state agencies, Senate Press Secretary Alicia Trost told CNN. The marathon session will go on until all bills are passed and Trost said legislators would stay through the night to get it done.

The fix requires cutting $15.5 billion, including massive cuts to education, social services and corrections. The state will also borrow $2 billion from local governments and shift money from other funds to fill the budget gap. Republicans met their primary goal in the stand off by preventing any tax increases. Based on the cuts, it doesn't seem like the Democrats won much in the standoff.

Some of the deep cuts include:

* $9 billion from schools, community colleges and state university programs
* $1.3 billion dollars from a state health program for the poor
* $124 million from a plan to provide health insurance to more than 900,000 children in low-income households

Local governments and public sector employees from around the state oppose the agreement.

California's budget situation got worse as the standoff continued with its bond ratings getting cut, which ultimately means the state will pay a lot more interest on its bonds, creating the need for even more cuts in the future. California is not the only state facing these budget difficulties. At least 12 other states and the District of Columbia face gaps totaling $23 billion in budgets already adopted, according to a report from the Center for Budget Policy Priorities.

Lita Epstein has written more than 25 books including Reading Financial Reports for Dummies.