No action for now on new state budget hole -- State leaders Wednesday delayed immediate action to resolve California's latest budget woes as they approached Wall Street with some trepidation seeking a short-term loan. Kevin Yamamura in the Sacramento Bee -- 10/8/08

Prison medics, CHP officers get big severance checks for unused leave and OT -- A little-known perk is helping some state employees walk away from their jobs with six-figure lump-sum payments for thousands of hours worth of unused vacation and work credits, a practice that cost cash-strapped California $174 million last year. John Woolfolk and Leigh Poitinger in the San Jose Mercury -- 10/8/08

San Francisco sues muni bond insurers -- San Francisco's city attorney filed a lawsuit Wednesday accusing five bond companies of selling California cities insurance policies that have become worthless because of the nation's mortgage meltdown. PAUL ELIAS AP -- 10/8/08

Treasurer sees $4.6 billion hole in budget -- Treasurer Bill Lockyer says that the 2008-9 state budget could be as much as $4.6 billion out of balance due to a sharp drop in revenues, demands by a federal court receiver for funds to improve prison health care and other "cash pressures." Dan Walters SacBee Capitol Alert -- 10/8/08

Mormons recruit out-of-state for gay marriage ban -- The Church of Jesus Christ of Latter-day Saints is part of a coalition of conservative groups backing Proposition 8, which would ban gay marriage in California's constitution. The measure will appear on the Nov. 4 ballot. JENNIFER DOBNER AP -- 10/8/08

Judge orders more hearings on prison healthcare funds -- U.S. District Court Judge Thelton Henderson today ordered more hearings on prison medical care receiver Clark Kelso's effort to force the state to transfer $250 million to him for construction of seven inmate long-term care facilities. Andy Furillo in the Sacramento Bee -- 10/8/08

Fake YouTube pages used to spread viruses -- Savvy Internet users know that downloading unsolicited computer programs is one of the most dangerous things you can do online. It puts you at great risk for a virus or another time bomb from a hacker. JORDAN ROBERTSON AP -- 10/8/08

Fiscal news grows worse for California -- Senate President Pro Tem Don Perata estimated Tuesday the state will face a $3 billion to $5 billion deficit this fiscal year without corrective action, a significant gap that increases the possibility lawmakers will have to consider new spending cuts or tax increases in a special midyear budget session. Kevin Yamamura in the Sacramento Bee -- 10/8/08

Another potential fiscal crisis looms -- The banner, which read "Crisis in Confidence," loomed large over the banquet hall's dais, a fitting slogan for the economic turmoil that continues to plague legislative leaders. Senate Leader Don Perata, D-Oakland, was one of four panelists at a forum Tuesday discussing the kinds of reforms needed to reshape government into a working, trustworthy institution. But he had more pressing concerns on his mind: how to pull the state out of yet another potential fiscal disaster. Steven Harmon in the Contra Costa Times -- 10/8/08

State financial woes worry governor -- Gov. Arnold Schwarzenegger will call legislative leaders back to the Capitol today to address California's mounting financial problems. On the agenda is a possible special session of the Legislature to discuss how to close gaps in the state budget, which was signed into law two weeks ago. Don Thompson AP -- 10/8/08

California's unemployment fund going broke, officials warn -- Appearing at an Assembly Insurance Committee hearing, Employment Development Department Director Patrick Henning and Deputy Director Deborah Bronow joined business and labor leaders to discuss how broke the fund will soon become – and how the governor and legislators can return it to financial health. Andrew McIntosh in the Sacramento Bee -- 10/8/08

Walters: Prison health battle could be a legal epic -- The conflict between California and federal judges over operation of the 170,000-inmate prison system could evolve into one of those epic legal struggles that involve bedrock constitutional principles and wind up in an historic Supreme Court decree. Or not. Dan Walters in the Sacramento Bee -- 10/8/08

State to get $5.6 million from drug maker Lilly -- California will receive $5.6 million from Eli Lilly & Co., the largest part of a record $62 million settlement announced Tuesday by state Attorney General Jerry Brown. The agreement with the Indianapolis-based drug maker ends a complaint by Brown and 31 state attorneys general alleging the company improperly marketed an anti-psychotic drug for uses the federal government hadn't approved. Jon Ortiz in the Sacramento Bee -- 10/8/08

Prop. 8 battle draws in $46 million -- More than $46 million in campaign contributions have poured into the struggle over the November ballot initiative that would ban same-sex marriage in California, and more money is on the way. John Wildermuth in the San Francisco Chronicle -- 10/8/08

Former eBay CEO Whitman donates to California redistricting measure -- Meg Whitman is digging into her deep pockets to help a California ballot measure and state Republicans, fueling speculation the billionaire former CEO of eBay is positioning herself to run for governor in 2010. Over the weekend, Whitman donated $200,000 to the campaign for Proposition 11, the redistricting initiative on the Nov. 4 ballot backed by Gov. Arnold Schwarzenegger and an array of groups seeking to change government. Shane Goldmacher in the Sacramento Bee -- 10/8/08

2008 Ballot Watch: Proposition 9: Victims' rights, prisoner releases -- Proposition 9 is California's third victims' rights initiative since 1982, but it also is a sweeping measure aimed at California's criminal justice system, focusing on parolees and life-term inmates looking to get out on parole. The item is in the Sacramento Bee -- 10/8/08

Foes of gay-marriage ban say poll shows Prop. 8 leading -- Opponents of a campaign to ban same-sex marriage in California said Tuesday that a new poll shows them in danger of losing -- unless people step forward with more contributions to pay for No on 8 television commercials. Jessica Garrison in the Los Angeles Times -- 10/8/08

Prison guards' recall effort hits bump -- Secretary of State Debra Bowen rejected on Tuesday the state prison guards union's petition to recall Gov. Arnold Schwarzenegger, saying the filing did not contain all of the necessary paperwork. Matthew Yi in the San Francisco Chronicle Michael Rothfeld in the Los Angeles Times -- 10/8/08

Many blame economy for increased stress in their lives -- His confidence was high, his self-esteem buoyed by a thriving business. He appeared financially stable and well- adjusted despite trying to cope with a shaky marriage. But his Sacramento therapist says that in recent months, the capital area man's demeanor changed markedly. He became anxious and depressed – clearly unnerved by the ups and downs of Wall Street. He grew detached, often cocooning himself in his office to monitor the stock market. Bobby Caina Calvan in the Sacramento Bee -- 10/8/08

Group wants to get inmates registered to vote -- A nonprofit group organizing voter registration for the incarcerated is making a plea to county officials to let them come to the county jail, but they're being met with resistance from the sheriff's department. Chris Metinko in the Oakland Tribune -- 10/8/08

Plunge in markets brings another kind of depression -- Porter Ranch murder-suicide is an extreme example of the stresses gripping the American psyche, experts say. Mental health professionals say referrals have soared. Denise Gellene in the Los Angeles Times -- 10/8/08

Commonwealth Club short-circuited over public power measure, Prop. H -- Public power play: The apolitical, revered Commonwealth Club has found itself stuck in the middle of a tug-of-war over one of San Francisco's most controversial ballot measures - Proposition H, which would put the city on a path toward public power and set clean energy mandates. Heather Knight, Audrey Cooper, Marisa Lagos in the San Francisco Chronicle -- 10/8/08

Matier & Ross: Oakland faces deficit, Dellums goes on junket -- Just one week after a projected $42 million deficit prompted Oakland officials to announce the possible layoff of 200 city workers and the closing down of city services on Fridays, Mayor Ron Dellums jetted off to Palm Beach, Fla., for a U.S. Conference of Mayors meeting on arts and tourism. Phillip Matier, Andrew Ross in the San Francisco Chronicle -- 10/8/08

Fed orders emergency rate cut to 1.5% -- The move came hours after Britain announced a massive bailout of its financial system, saying it would shore up shaky banks by buying preferred stock, guaranteeing bonds and infusing the monetary system with new cash. Maura Reynolds in the Los Angeles Times -- 10/8/08

Federal Reserve to buy up short-term commercial debt -- About $1.3 trillion in commercial paper will be eligible for purchase, senior officials say. The hope is to encourage financial firms to start lending again. Maura Reynolds in the Los Angeles Times -- 10/8/08

High-end restaurants on a tightrope of economic uncertainty -- Celebrity chefs behind Melisse, Anisette, Craft and other deluxe dining spots try to lure recession-wary diners. Russ Parsons in the Los Angeles Times -- 10/8/08

L.A. mayor warns businesses of tough times ahead -- Villaraigosa, speaking to about 500 members of the United Chambers of Commerce at their annual mayor's luncheon at the Warner Center Marriott, said he will resist efforts to raise the business tax - which has been reduced to 15 percent under his administration - even with the city expected to face a shortfall from $250 million to $400 million this coming year. Rick Orlov in the Los Angeles Times -- 10/8/08

Home-tax trims won't hurt San Francisco assessor says -- Half of San Francisco homeowners who requested lower property taxes have been granted a reduction, but the negative impact on the city's overall budget will be minimal, officials said Tuesday. Robert Selna in the San Francisco Chronicle -- 10/8/08

More homeowners request reduction in property taxes -- Hoping to take advantage of one of the few benefits of the dismal real estate market — a smaller tax bill — some 5,000 Santa Clara County property owners appealed their assessment this year, 35 percent more than in 2007. Sue McAllister in the San Jose Mercury -- 10/8/08

Wells Fargo, Citigroup could share Wachovia -- Among the possible scenarios reported, San Francisco's Wells Fargo could agree to take 75 to 80 percent of Wachovia's $488 billion in deposits along with the bank's Southeast and California branches, leaving Citigroup the remaining deposits and branches in the Northeast and Mid-Atlantic region. Victoria Colliver, James Temple in the San Francisco Chronicle -- 10/8/08

Bay Area could be saved by Asian markets -- Prayer mats facing East: That the Bay Area has remained relatively insulated from 500-point stock market plunges and other recessionary omens is largely due to our outsize contribution to the one remaining bright spot in the nation's economy: exports. That may yet save us, says the author of a Bay Area Council report to be released today. But only if those markets on which the Bay Area depends remain upright. Andrew S. Ross in the San Francisco Chronicle -- 10/8/08

Fear factor: San Francisco's small businesses suffer -- From a downtown shoeshine stand to a bakery out on Third Street, the country's economic downturn is squeezing San Francisco businesses in ways big and small. Customers are buying cheaper items. When the stock market drops, they don't shop at all. And some are falling behind in their bill payments. Susan Sward in the San Francisco Chronicle -- 10/8/08

700 car dealers could go belly up this year -- Speaking to the Automotive Press Association in Detroit, Annette Sykora on Tuesday urged fast government action on putting a $700 billion financial industry rescue plan in place. George Raine in the San Francisco Chronicle -- 10/8/08

'Significant' job cuts hit Mervyns headquarters -- Mervyns LLC on Tuesday disclosed a fresh round of job cuts, with the most recent reductions, described by the company as "significant," descending on the struggling retailer's headquarters. George Avalos in the Oakland Tribune -- 10/8/08

United Airlines to lay off 414 at SFO -- United Airlines has told the union that represents its mechanics at San Francisco International Airport that it will lay off as many as 414 workers beginning Dec. 7, as part of its efforts to contain costs. George Raine in the San Francisco Chronicle -- 10/8/08

As L.A. County faces fiscal tightening, more people are seeking aid -- The state is sending less money than expected, while the numbers of people on Medi-Cal and general relief are up. More cases of child abuse are anticipated as well. Garrett Therolf and Molly Hennessy-Fiske in the Los Angeles Times -- 10/8/08

Presidential debate, Round 2: No knockdowns -- With economic turmoil dominating the national conversation, Sen. John McCain - in a sharp contrast to his campaign's aggressive strategy to arrest declining polls - engaged in an unexpectedly civil discussion Tuesday in the second presidential debate, laying out his differences with Sen. Barack Obama on economic policy, spending and foreign policy. Carla Marinucci in the San Francisco Chronicle -- 10/8/08

McCain: how he did -- The conventional wisdom about town hall debates is that candidates are less likely to attack their opponents in such close proximity to each other and voters, particularly undecided ones. But Republican Sen. John McCain ignored tradition at Tuesday's presidential debate in Nashville, peppering his remarks with his greatest-hits list of attacks on Democratic Sen. Barack Obama - many of which have been discredited by nonpartisan truth squads. Joe Garofoli in the San Francisco Chronicle -- 10/8/08

Obama: how he did -- John McCain is playing defense in all the battleground states, and all Obama needed to do was hold his own and drive home his populist message on the economy. While sticking mainly to vague generalities and skirting tough questions, he succeeded in giving the impression that he would soothe middle-class woes and set the country back on track. He exuded his usual calm and looked presidential, important in a time of crisis. Carolyn Lochhead in the San Francisco Chronicle -- 10/8/08

California boarding schools? It's not an oxymoron -- As a young woman living in Southern California, Kelly Boss never thought much about boarding schools. They were a mystery or at most a cinematic fancy embodied by Brookfield of "Goodbye, Mr. Chips" or the Welton Academy of "Dead Poets Society." Carla Rivera in the Los Angeles Times -- 10/8/08

Supervisors back `green' L.A. County -- In what environmentalists called the most progressive environmental action ever taken by Los Angeles County, the Board of Supervisors on Tuesday moved to make buildings and homes more energy efficient and landscaping more drought resistant. Troy Anderson in the in the Los Angeles Daily News -- 10/8/08

San Francisco traffic noise risks health of 1 in 6 -- Noise from traffic is putting nearly 1 in 6 San Francisco residents at risk for heart disease, high blood pressure and other stress-related illnesses, city public health officials have found. Rachel Gordon in the San Francisco Chronicle -- 10/8/08

Los Gatos Creek watershed logging showdown comes to a head -- After three years of hearings, debates and studies, a plan by San Jose Water Co. to log redwood and Douglas fir trees over 1,002 acres in the Los Gatos Creek watershed along Highway 17 is facing its day of reckoning. Paul Rogers in the San Jose Mercury -- 10/8/08

Shining a bright light on a 'green mayor' -- I had just finished talking to the mayor about the city's annoying billboards -- asking if he intends to do anything about them -- when I turned to a couple of his aides with a question: Are there still roughly 4,000 illegal billboards out there? Steve Lopez in the Los Angeles Times -- 10/8/08

Former congressional candidate arrested on fraud charges -- Delecia Holt, who ran for seats in Orange and San Diego counties, is accused of writing bad checks, skipping out on bills and of committing welfare fraud, authorities say. H.G. Reza in the Los Angeles Times -- 10/8/08

LAPD: System will improve behavior -- Defending significant changes in how it punishes officers, LAPD officials told the civilian Police Commission on Tuesday that a disciplinary system that gives supervisors greater discretion will better hold cops accountable for misconduct. Rachel Uranga in the Los Angeles Daily News -- 10/8/08

Barry Bonds passes time at UCSF kids hospital -- Bonds, who used to hit baseballs for a living on the San Francisco waterfront, has been unwillingly retired from the game for a full year while he awaits federal trial on perjury charges in connection with baseball's steroids scandal. Steve Rubenstein in the San Francisco Chronicle -- 10/8/08

Troubled economy likely to hit transit, races -- The downturn in the economy is expected to hit Bay Area transit agencies hard and will serve as a gloomy backdrop to races for the governing boards overseeing BART and AC Transit in next month's election. Rachel Gordon in the San Francisco Chronicle -- 10/8/08

Feds probe L.A. airport agency's allocation of $40 million to visitors bureau -- FAA tentatively concludes that the transfer of the funds was illegal. The L.A. agency says it is examining its records but believes it followed the law. Such money cannot be used for general promotion. Dan Weikel in the Los Angeles Times -- 10/8/08

California struggles to inspect private tour buses -- The fatal crash Sunday of a casino-bound bus in Colusa County has raised concerns about the state's ability to regulate a growing trade of mom-and-pop companies ferrying thousands of gamblers daily to local casinos. Tony Bizjak and M.S. Enkoji in the Sacramento Bee -- 10/8/08

Refugee community asks hard questions about bus crash -- Grief-stricken Southeast Asian refugees asked hard questions Tuesday night about the casino bus accident that claimed eight lives and injured all 35 others aboard. Stephen Magagnini and Chelsea Phua in the Sacramento Bee -- 10/8/08

U.S. scientist, two in Japan share Nobel Prize in Physics -- The Nobel goes to Yoichiro Nambu of Chicago and Makoto Kobayashi and Toshihide Maskawa of Japan, who made strides in the study of a phenomenon called broken symmetry. Thomas H. Maugh II in the Los Angeles Times -- 10/8/08

The last remaining Holocaust survivors share memories and pain -- Frail and elderly, they speak at L.A.'s Museum of Tolerance. 'It's so critical to tell our story,' says one of them, an 81-year-old woman. Maria L. LaGanga in the Los Angeles Times -- 10/8/08