They're leaving Califonia in droves.

For the fourth year running, more residents left California than moved there from other states. In the year ending July 1, 2008, the state lost 144,000 people, more than any other US state, according to census estimates.

The most popular destinations for those quitting California are Texas, Nevada, Arizona and Washington state, the U-Haul truck rental company told the Los Angeles Times.

I have read locally that we may lose a seat in Congress due to the shrinking population. Read the whole story here from the Telegraph in the UK.
On the same subject of cost of living, You can compare your cost of living with other cities by using this calculator.