California State Controller John Chiang said the Golden State could run out of money by the beginning of March.

Chiang said California must come up with $3 billion to remain solvent and have some money in reserve. If state officials don't take action, California would likely have to delay state tax refunds and other payments.

Lack of revenue and higher than normal spending means the state government has spent more money than it has in its coffers.

The state assembly is expected to move quickly to resolve the problem. A bill currently moving through a legislative committee would allow the state government to borrow money from dedicated funds.

Financial experts forecast another tough budget year for California, whose government has had to deal with shortfalls in the past. In the summer of 2009, the state issued IOUs to make payments.