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Schwarzenegger plans to ask Wall Street investors to give California a lump sum of $15 billion in exchange for three years of the state lottery's revenue

If voters reject the idea, the governor proposes a temporary 1 percent increase in the sales tax, which would expire in 2011.

Schwarzenegger's revised plan abandons some of the controversial cuts he proposed in January, including the early release of 22,000 prisoners, the closure of dozens of state parks and deep cuts to education.

The governor instead calls for increasing funding to education by $200 million over the current fiscal year, which ends June 30. But cost-of-living increases for schools would be withheld - an amount totaling about $4 billion.

spokesman for the Department of Finance, believes the state's prison expenses can be shaved by as much as $300 million by the expected reduction in the number of inmates and parolees.