In November 2012, I was interviewed by Joe Weisenthal at Business Insider. One of my comments during our discussion on state and local governments was:
I wouldn’t be surprised if we see all of a sudden a report come out, “Hey, we’ve got a balanced budget in California.”
At the time that was way out of the consensus view. And a couple of months later California announced a balanced budget, see The California Budget Surplus
The situation has improved since then. Here is the most recent update from California State Controller John Chiang: Controller Releases December Cash Update
State Controller John Chiang today released his monthly report covering California's cash balance, receipts and disbursements in December 2013. Revenues for the month totaled $10.6 billion, surpassing estimates in the state budget by $2.3 billion, or 27.7 percent.
Total revenues for the fiscal year-to-date were $2.5 billion ahead (6.4 percent) of budget estimates.
"Revenues for the first half of the fiscal year are well ahead of estimates and reflect a surging economy fueled by a boom in technology, rising exports, improving consumer confidence, and a new housing upswing," said Chiang.
emphasis added
This is just one state, but I expect local and state governments (in the aggregate) to add to both GDP and employment in 2014.