California Governor Arnold Schwarzenegger has declared a fiscal emergency to address a state budget deficit of some $US24.3 billion.
He also ordered many state offices to close for three days each month until June 2010, with staff unpaid for those days.
California has been one of the US states hardest hit by the recession.
State legislators have missed a deadline of 1 July to approve a budget for the coming financial year.
State Controller John Chiang has said the failure to meet the deadline means the state deficit will increase by up to $US6.5 billion by September.
He earlier warned that drastic measures would have to be taken to conserve cash, including delaying payments to companies working for the state and to those relying on benefits and grants.
Under the emergency measures, some state offices will be closed on the first, second and third Friday of every month until June 2010, with staff not paid for those days.
The BBC reports California struggles to balance its budget every year, but this year has been particularly difficult.
The Californian economy is the world's eighth largest economy and generates nearly 13% of US gross domestic product.