For now, folks living in New York can watch the soap opera playing out in California from a comfortable, continent-sized distance.

But after that drama plays out, New York is next.

Smart Money: Right now, at least 47 states are facing significant shortfalls in their 2009 and/or 2010 budgets, according to the Center on Budget and Policy Priorities, a think tank in Washington, D.C. And many of those states are looking to tax hikes to help fill the gaps.

“Pretty much everyone is doing poorly,” says Kim Rueben, senior research associate at the Tax Policy Center. “It’s just a question of who’s hurting more than others.”

The top honor goes to California, which is projecting that it will fall about $25 billion short come fiscal 2010. Taking second place is New York with a projected $17.6 billion deficit for fiscal 2010, according to the National Conference of State Legislatures, a bipartisan policy research organization in Washington, D.C.

This can't be a surprise to anyone. New York is like California. It's highly exposed to some of the worst areas of the economy. It's got a huge government apparatus, and its political system is something of a joke (see: The New York State Senate). Thank god for New Yorkers that there isn't a referendum system here, or the state would've gone bust years ago.

New York should be hoping for a California bailout, since that's their fate, too.

You can read more from the think tank here.

State Budgets