The California budget deal, crafted by California Governor Arnold Schwarzenegger's and the California state legislature is the proposed solution to the California state budget crisis.
The plan includes what is called a "trigger" mechanism for tailoring the budget in regards to the President's economic recovery bill: spending cuts which total $947.7 million and $1.8 billion in tax increases will be partially reconsidered only if California receives at least $10 billion in federal funds to offsset state expenditures. The Department of Finance currently estimates that California will receive $7.9 billion during 2008-09. The final decision on whether the state has met the $10 billion threshold must be made by the state Treasurer and the Director of Finance before April 1, 2009.
The economic stimulus package under consideration by the Democratic government in Washington, D.C., includes California-focused spending that could "wipe out nearly a quarter of California's budget shortfall." This includes more than $11 billion in healthcare and education money that could go directly to reducing the deficit through mid-2010. Such a bailout could contain approximately $21.5 billion.