Gov. Arnold Schwarzenegger's plan to close a roughly $40 billion budget deficit over the next 18 months and provide a $2 billion reserve relies on tax increases, spending cuts and borrowing. Here are the major components.

Revenue: $14.8 billion

• $9.5 billion by raising the sales tax by 1.5 cents on the dollar for three years.

• $1.4 billion by imposing sales taxes on some services and activities that currently aren't taxed, such as golf fees, amusement parks, sporting events, veterinary treatment and vehicle repair.

• $1.4 billion by reducing the income tax credit for dependents to the level of personal credits in 2009 tax year – from $309 per dependent to $99.

• $1.2 billion by imposing a 9.9 percent per barrel tax on oil extracted from California.

• $829 million by raising the excise tax on alcohol by 5 cents a drink.

• $451 million by raising annual vehicle registration fees by $12 per vehicle.

• $38.5 million by eliminating property tax deferral for eligible elderly, blind or disabled homeowners.

Borrowing: $10.3 billion

• $4.7 billion from selling revenue anticipation warrants in July 2009. They would not have to be repaid in the 2009-10 budget year.

• $5 billion from investors against future lottery earnings. Lottery changes must be approved by voters.

• $594.2 million, mostly by borrowing from special funds and shifting tribal gambling revenues to general purposes contingent on receiving federal funds for transportation and safety programs.

Spending cuts: $16.5 billion

• $5.2 billion cut to K-12 education and community colleges by reducing base funding under Proposition 98 to the minimum and giving school districts the ability to reduce the 2009-10 school year by five days. Because schools' funding formula is based in part on state revenue, the reduction could be far deeper if the new revenues in the governor's plan are not approved.

• $1.7 billion by furloughing state employees by two days a month until June 30, 2010, permanently eliminating Columbus Day and Lincoln's Birthday as paid state holidays and eliminating overtime pay for holidays. About $282 million of the savings comes from layoffs and shifting state employee health care from CalPERS to managed care.

• $1.4 billion by reducing monthly grants to the federal minimum for low-income aged, blind and disabled on Supplemental Security Income/ State Supplemental Program and eliminating payments to recent immigrants.

• $1.1 billion from CalWORKS welfare programs by reducing welfare grants by 10 percent, cutting benefits at 60 months for some recipients, requiring reviews every six months and eliminating a cost of living adjustment due in June 2010.

• $788 million to the Department of Corrections and Rehabilitation by eliminating parole supervision for all but those who have committed serious, violent or sexual crimes and reducing the medical budget by 10 percent.

• $744.2 million to Medi-Cal by eliminating some treatment options such as optometry, dental and psychological, limiting benefits for some legal immigrants, raising the income eligibility requirements to pre-2000 levels, cutting hospital reimbursement rates by 10 percent and eliminating cost of living for county-based administration.

• $692 million by cutting the University of California and California State University budgets by 10 percent and eliminating the planned 7.5 percent budget increase in 2009-10.

• $459 million by eliminating general purpose grants to local transit agencies.

• $473 million by reducing state payments for In-Home Supportive Services health workers to the minimum wage, restricting services to the neediest recipients, increasing fees for some recipients and eliminating cost-of-living adjustment due in June 2010.

• $422.8 million to the Department of Developmental Services, about one fifth of which is a 3 percent cut to regional center providers. The remaining savings will be negotiated with the Legislature.

• $275 million by eliminating the state First Five Commission and shifting money – and half of the money from 58 county commissions – to children's health programs. Voters would have to approve changes to Proposition 10.

• $226 million by diverting money set aside in Proposition 63 for mental health services to fund mental health managed care. Voters need to approve the change.

• $163.4 million by continuing through June 2010 "one-time" cuts made in the current budget for state courts and eliminating the cost-of-living adjustment.

• $150 million by eliminating or consolidating a variety of state entities, including the elimination of the Integrated Waste Management Board and the California Conservation Corps. The savings estimate is soft, officials said, because it's unclear how the consolidations will take place.

• $87 million by making various changes to the Cal Grant program, including the elimination of new grants awarded on the basis of competition. Existing competitive grants would be maintained.

• $43.2 million by cutting the Legislature's budget 10 percent and eliminating a cost-of-living increase.

• $37.8 million by eliminating food stamps for legal immigrants not eligible for federal assistance.

Source: California Department of Finance