In his latest effort to patch California's cash-strapped budget, Gov. Arnold Schwarzenegger has resurrected an idea to convert overhead freeway displays into electronic advertising billboards.

Under the plan, a billboard company would replace existing digital displays that show abduction-related Amber Alerts and traffic updates with sophisticated color screens that also show advertising. The state currently operates 708 electronic boards on highways.

The proposal faces significant hurdles, particularly obtaining a U.S. Department of Transportation waiver of federal highway regulations. The governor sees the plan as a way to generate revenue and improve the technology of the warning signs, but critics fear the new signs would distract drivers and lead to more accidents.

The governor's Department of Finance quietly submitted a draft bill to the Legislature this week to help raise money for the 2010-11 budget as leaders seek to close a $19.9 billion deficit. Finance spokesman H.D. Palmer compared the proposed signs to one installed at California State University, Sacramento, along Highway 50, although they would appear directly above drivers rather than alongside roadways.

The draft proposal, which calls the project "experimental," would allow the state to contract out its highway signs for up to 20 years. The Department of Finance has not estimated how much money the plan would generate, but Palmer said it would help reduce the deficit in 2010-11.

"We think this has the potential to generate significant revenue," he said.

A legislative source close to budget talks said the administration estimated late last year that California could raise as much as $2 billion for 500 message boards over 20 years. The state could obtain a sizable portion of that money as a lump sum to use in the 2010-11 budget.

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