There's no provision in bankruptcy law for a state to go bankrupt since they can always raise taxes. But many house owners will be going bankrupt. Soon they will owe the bank more than their house is worth. This in effect will create a virtual Berlin wall in California. They won't be able to move away. The state will then proceed to ream their stuck victims.
I was using the term "bankruptcy" euphemistically. What I meant is that they will default on their debt. I think that is a very real possibility in 5 years. They've already got high taxes, and aren't controlling their spending. They can't continue to borrow to fund operating expenses. The rating agencies have gone easy on them so far.