California enters 2010 facing a $20 billion hole in its budget. Does this sound like a familiar story? By all evidence not much has changed since last year when the governor and legislature took 144 days to solve this problem—and then apparently did not.

The Governor has floated creative ideas for saving and raising money to get the state out of its terminal financial doldrums from shipping undocumented immigrants off to Mexican prisons to mounting overhead electronic billboard displays on freeway bridges.

They received only the most tepid response from legislators in both parties who are in the grips of a political paralysis which many think unprecedented as they struggle to find any common ground. Democrats want to raise taxes which Republicans, including the Governor, fiercely resist preferring cuts in services.

Even some of the cuts previously approved for prisons and Medi-Cal rates were never enacted while $1 billion more than planned must be spent on public schools because of Proposition 98 guarantees.

These are just some of the balancing act choices, none of them popular, in a bitterly divided legislature.

With the job market still sluggish even after the infusion of millions in federal stimulus funds and with the state’s jobless rate holding at12.4%, the vague hopes for recovery that accompanied the cheery pronouncements from Sacramento after last year’s budget crisis have only solidified voter cynicism that anything can ever get done.

These sentiments are echoed across the nation where voter revolt has already cost the Democrats a Senate seat in Massachusetts, governorships in New Jersey and Virginia, and the likelihood with the announced retirement of Senator Evan Bayh, a popular Indiana Democrat, that the contagion is spreading and could engulf the Administration by the time of the November mid-term elections. Loss of their Senate majority is already a foregone conclusion.

In California, this is posing problems for Barbara Boxer, the former Marin resident now in her third term whose credentials as one of the most liberal members of the Senate has not hurt her in past campaigns but could be wearing thin as anti-incumbent fever stoked by Tea Party advocates and reinvigorated conservatives sweeps the country.  

While Boxer is still seen as the narrow favorite, the entry into the race of political moderate and former Peninsula Congressman, Tom Campbell, muddies the picture which showed Carly Fiorina, the former Hewlett Packard chief, with the early lead and a vast fortune to back it up.

This creates an opening for Irvine Assemblyman, Chuck DeVore, who as the most conservative of the three may be positioned best to wrest the nomination. That would be welcome news for Boxer in a state which still leans heavily Democratic and who held off a charge by an ardent conservative to gain her seat in 1992.

But if California’s economy and the nation’s have not significantly rebounded before November which is still a good bet, no incumbents are safe.

Millions will be poured into the race to defeat Boxer, aided by the Supreme Court’s recent ruling allowing corporations to spend unlimited sums in federal elections. If this happens, California may become the bell weather state for the majority party’s fortunes in November and beyond.

But Republican incumbents in California and everywhere must also worry if they cannot deliver.