California has never lacked drama. In 2010, as the nation’s most populous state gingerly emerges from the recession, it faces a debt load of $64 billion, a star-studded gubernatorial race and one of the highest unemployment rates in the country.

Burdened by the crushing debt and dwindling sources of revenue, California faces a Sisyphean climb out of its financial hole. On Jan. 13, Standard & Poor’s cut the state’s debt rating to A- from A, warning the outlook is negative. Moody’s Investors Service and Fitch Ratings already gave California the lowest credit rating among all 50 states. Gov. Arnold Schwarzenegger is scrambling to close a $20 billion gap in the state budget during his last year in office. California’s unemployment rate reached 12.3 percent in November, compared with 10 percent for the country in the same period.

The dramatic decrease in employment and consumer spending took a toll on California’s total tax revenue, which fell 9.2 percent to $24 billion during the third quarter, the most recent period for which statistics from the U.S. Census Bureau were available. The state’s general sales tax revenue declined 5.8 percent to $7.7 billion, personal income tax revenue fell 16.1 percent to $9.7 billion and corporate tax revenue dropped 13.3 percent to $1.9 billion.

Certainly, the economy will top the list of concerns for voters heading to the polls this year. Former eBay chief executive officer Meg Whitman, California Attorney General Jerry Brown and Guess Inc. co-founder Georges Marciano are vying to be the next governor, while Carly Fiorina, former chairman and ceo of Hewlett-Packard, hopes she’ll be the Republican candidate who can knock veteran Democrat Sen. Barbara Boxer out of office.

The Golden State does have a bright side. Exports are ticking up, owing to a weak greenback and an economic recovery in Asia. Last year, Hollywood set a new box-office record with $21.3 billion in global ticket sales. The apparel wholesale business is also projected to see a modest increase, although the retail sector continues to endure a shakeout amid store closures.

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