The governor's proposal would revive a project for the Santa Barbara coast that was rejected by the State Lands Commission in January. This latest fundraising suggestion comes on the heels of other money-making ideas that included selling state-owned properties such as San Quentin State Prison and the Los Angeles Memorial Coliseum.

Offshore oil drilling platform Gail is operated by Venoco, Inc. off the coast of California near Santa Barbara, Calif. An agreement paving the way for the first oil drilling off the California coast in about 40 years has run into unexpected opposition that may sink it altogether this week. AP Photo/Chris Carlson

The governor's legislation would give the Department of Finance - whose representative on the commission was the lone vote in support of the drilling project - authority to reconsider the proposal.

"It's got tremendous environmental benefits, and we can't turn a blind eye to the fiscal benefits," said Tom Sheehy, who represented state finance director Michael Genest in the commission's 2-1 vote.

The governor's support for the drilling project, which would expand drilling off Platform Irene in the Santa Barbara Channel, does not indicate a change in his opposition to offshore drilling, Sheehy said. The proposal would not violate the terms of the state's drilling moratorium, which includes an exception for any state oil field that drains into a federal oil field, he added.

The project, which was unveiled last year, enjoyed unprecedented support from many anti-oil drilling environmental organizations. Several key groups in Santa Barbara agreed to lobby for the project after reaching an agreement with the oil company, Houston-based Plains Exploration & Production. Under the deal, the company would provide money for the state and a commitment to shut down its operations countywide by 2022.

Sheehy estimates the state would immediately receive $100 million and a combined $1.8 billion over the time span of the project.

Linda Krop, the attorney who represented the Santa Barbara environmental groups, said this latest development took her by surprise. The groups she represents are opposed to the governor's proposal, she said.

"Our proposal was vetted through a public hearing process and there was an opportunity for public debate," she said. "We do not support a process where an oil project can be approved through a budget revision."

Scott Winters, a Plains' spokesman, did not immediately return a call seeking comment. While company representatives have said they do not plan to empty the reserve, a competing company estimated the reserve could be as large as 250 million barrels worth billions of dollars in today's prices.

Assemblyman Pedro Nava, D-Santa Barbara, said the success of the governor's proposal hinges on the success or failure of several ballot initiatives that could make more money available to the state.

Nava was among several legislators in the state Assembly and Coastal Commission who raised concerns during the drilling project's approval process that the proposal could encourage even more drilling along California's coast in the future.

"If the initiatives fail, there will be greater pressure to permit offshore oil drilling if the state receives royalties from the drilling," he said.