Governor Jerry Brown and legislative leaders hope to reach a deal in time for the June 15 deadline to pass a balanced spending plan.
In negotiations, Brown and state lawmakers have agreed to a rainy day fund and to pay down massive liabilities in the teachers' pension system.
However, while Brown is arguing the extra $2.4 billion surplus in extra tax revenue is temporary because of stock market gains, Democratic lawmakers say this is one of the first years since the downturn in which the state has discretionary money to spend on education, health care and services for the poor.
Brown says he would like the money to go into planning and building the high speed rail system that he's been campaigning for.
So, with less than a week until the constitutional deadline, the budget conference committee is expected to meet again today to try to come to an agreement for the $107 billion general budget fund.