It was estimated that California’s budget deficit was around $40 billion. The legislature and the Governor agreed to a 17 month budget deal that provided a combination of cuts to programs, borrowing and new revenues. The final budget was made up of a reduction in state spending of $14.9 billion; multi-year revenue increase of $12.5 billion; $7.8 billion from the anticipated federal stimulus revenue; $5.4 billion in borrowing; and almost a billion dollars worth of cuts via the Governor’s veto authority.

In order for this package to work, key components of this budget package requires that six proposals go before the voters for their ratification. Secretary of State Debra Bowen has assigned the six measures proposition numbers that will be on the May 19, 2009 statewide Special Election ballot:

Proposition 1A
This proposition, also known as the Spending Cap Amendment Proposition, would propose limiting future deficits and overspending by increasing the size of the state “rainy day” fund and requiring above-average revenues to be deposited into it. It is estimated that it would provide an additional $14 to $16 billion from 2010-11 through 2012-13 in new revenue. It would also increase the amount of money put aside in the state’s rainy day reserve. Specifically, the taxes that would be increased for up to four years under Proposition 1A are:

• 1-cent-per-dollar increase in the state sales tax.
• The state's vehicle license fee will nearly double under Proposition 1A.
• An increase in the state's personal income tax.

Proposition 1B
This proposition would modify Proposition 98, the K-12 guarantee proposition in order to provide the state with flexibility in managing its debt. With the state’s current fiscal down flow, the guarantee that is part of Proposition 98 for the schools has also declined. This proposition would allow the state to reduce its fiscal aid to K-12 and community colleges for maintenance, saving the state several billion dollars in 2009-10 and 2010-11. In exchange it would require the state to increase annual school funding in future years to make up for the fiscal impact of this current decrease, thus making the schools fiscally whole again.

Proposition 1C
This proposal would sell $5 billion of future proceeds of the state lottery in order to provide the general fund a lump sum in order for the state budget to be balanced without further cuts to education or social service programs.

Proposition 1D
This proposition would modify the “First 5” program established by Proposition 10. It would redirect $608 million in "First 5" money set aside in Prop 10 revenues for early child development to other children's programs for five years, helping to close California’s budget deficit.

Proposition 1E
This proposition would also redirect dollars from another voter approved program, the Mental Health Services Act, which was established in 2004 by Proposition 63. This proposal would shift $227 million annually for two years to pay for the Early Periodic Screening, Diagnosis and Treatment Program, a low-income child development program that would otherwise be paid for out of the state's general fund.

Proposition 1F
This measure would prohibit the California Citizens Compensation Commission, which has the authority to establish and adjust the salary and benefits for members of the Legislature and other state officers, from increasing salaries if the Director of Finance determines that there will be a negative balance in the Special Fund for Economic Uncertainties at the end of the year.

Proposition 13
This proposition was not part of the budget deal, but was in the pipeline to be qualified for the next statewide election. It would exempt buildings that have been seismically retrofitted from the requirement that their property be assessed for the purposes of increasing the property tax value that is collected by local governments.