Legislative leaders and Gov. Arnold Schwarzenegger have reached a tentative deal on closing the state's projected $40 billion budget gap, according to sources close to the negotiations.

Staff members are still working out some drafting issues, one source said, but a vote is scheduled for Friday.

Details of the pact are still emerging, but the plan involves tax increases, cuts and borrowing. The state also stands to receive billions in federal stimulus money as the package approaches closure in Washington.

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