The LA Times has put up their user-friendly approach to the California budget. It's designed to show that it's impossible to balance the budget without raising taxes.
http://www.latimes.com/news/local/la-statebudget-fl,0,95571.htmlstory?sel=2/4/10/33/12/27/30/32/42/44/49/54/9/29/19/34/47/11/26/43/45/50/52/53/37/35/36/38/40/51/41/23/24/
That's my solution. With it, the state is still $4,000,000,000 in the hole and I'm really out of options since I'm not going to choose things that are illegal. So how else do you make up $3,000,000,000. I think the state could get close if it tolled all major roadways and made those tolls pay for the roads. Then the surface streets would be paid for with the gas tax. Through this approach, you may still need a gas tax increase, but the goal is for the roads to be budget neutral. That itself would save a ton of money.
Would I attack prop 98? Of course. Would it be successful? Of course not, so it's not something that could fix the current mess. More like a down the road kind of thing.
What would really get the state out of the red though is population growth. This is where local governments come in. These municipalities must loosen zoning laws so that housing prices can come down via more housing units getting built. More people, more tax revenue.
If you have more solutions, post them here.