In what amounts to a Boston Tea Party-type rebellion against the government, California counties are threatening to withhold their money. Constitutional officers are also refusing to accept Gov. Arnold Schwarzenegger’s authority to furlough workers. Meanwhile, two more California banks failed over the weekend, and a judge ordered the state to release up to 37 percent of its prison population. What is ahead for California?

Los Angeles, Sacramento, Orange, Colusa, Riverside, Imperial and San Bernardino counties may be on the verge of insurrection.

Several counties “say they’ve had enough—and they aren’t going to take it anymore,” reports the Sacramento Bee. Plans to withhold money, levy lawsuits against the state, and refuse to provide state-mandated services are in the works, and in some cases are already being implemented.

“It’s not at all surprising,” said Gerry Hertzberg, policy director for Los Angeles County Supervisor Gloria Molina. “We’ve got obligations.”

Seeds of rebellion were sown after the state announced it would halt payments on $3.5 billion worth of construction projects, tax refunds, and county transfer payments. The state is struggling to find a way to cover a projected $42 billion budget deficit.

“I think it just reflects the severity of the problem,” said Jim Wiltshire, deputy director of the California State Association of Counties. “[F]olks are just trying to find a way to keep going.”

Terri Sexton, a taxation expert at the University of California–Davis, said she’s never seen anything like this grassroots revolt. But, as she notes, California “has never been in this fiscal position.”

But it is not only counties that are in rebellion. State Controller John Chiang, Lt. Gov. John Garamendi, Secretary of State Debra Bowen, Treasurer Bill Lockyer, Public Instruction Superintendent Jack O’Connell, Insurance Commissioner Steve Poizner, Attorney General Jerry Brown and the Board of Equalization have refused to accept Governor Schwarzenegger’s order to require 15,000 of their employees to work reduced hours.

On Monday, Schwarzenegger filed suit to force compliance.

Meanwhile, a panel of judges ruled Monday that the state must release between 24 and 37 percent of its prisoner population within three years. The panel said that California’s prison system is swollen to almost double its capacity and thus was violating prisoners’ constitutional rights. The ruling is expected to save the state between $800 and $900 million per year.

In other news, two more failed banks in California have been seized by regulators. Alliance Bank of Culver City and County Bank, Merced, were the 33rd and 34th banks to be taken over by the Federal Deposit Insurance Corporation since the recession began. Nine banks have been allowed to fail so far this year.

The state is also suffering a severe drought, with Los Angeles announcing what is, in effect, its first water rationing in its 200-plus-year history.

News out of California is mostly grim, but with the seeds of insurrection growing, things could be about to get worse. And that is bad news for America as a whole. California is often a lead indicator for the whole country. Watch California!