Facing a $42 billion budget deficit, lawmakers in Sacramento struggled to pass a California budget as 2009 began. After a three-month impasse Gov. Arnold Schwarzenegger and the state Legislature came to a budget deal in February 2009. The deal is contingent upon voter approval of five out of six propositions which address different areas of the budget. These measures address budgetary issues involving education funding, lottery profits, taxation of cigarettes, mental health funding, and the salaries of elected officials.

Proposition 1A is the centerpiece of the February 2009 budget package created by Governor Arnold Schwarzenegger and the California Legislature. Prop. 1A would make significant changes to the state's budgetary procedures regarding rainy day reserve accounts and state spending.
Proposition 1B would amend the state consitution by changing aspects of California Constitution regarding Proposition 98 to allow the state to use education funds to address the state's budget problems in the short term.
Proposition 1C would significantly alter California law and the State Constitution in regards to the California's lottery system in both its operation and in how the funds are spent. It would allow the state to borrow $5 billion from existing lottery profits to help address the state's current budgetary problems. The measure would also allow the state to borrow from future lottery profits, which is currently not the case.
Proposition 1D would temporarily allow Proposition 10 (1998) revenues to be used to fund other state health and human services programs for children up to age five. It would also make permanent changes to the operations of state and local commissions that manage First 5 funds.
Proposition 1E would amend the Mental Health Services Act by transferring funds designated for mental health programs into the state's General Fund for a two-year period. The Mental Health Services Act, established in 2004 with the passage of Proposition 63, imposed a state income tax surcharge of 1% on personal income exceeding $1 million. This revenue has been used to fund mental health programs implemented by the state Department of Mental Health.
Proposition 1F would prohibit the state commission that sets salary levels for elected officials from increasing those salaries if the state General Fund is expected to end the year with a deficit. The measure would require the state Director of Finance to determine if a given year is a deficit year, and provide certification of that finding to the commission by June 1.