"We are on the verge of a historic breakthrough on water," Schwarzenegger said.
While negotiations appear to progress with leaders meeting with the governor almost every day this week, the big question is will a deal be reached on time?
Schwarzenegger has until Sunday to sign or veto around 700 bills the Legislature sent him last month.
And as recently as Thursday, he threatened: they had better give him a water plan now or else, saying, "I made it clear to the legislators and to the leaders that I will veto a lot of their legislation, a lot of their bills."
But lawmakers say they cannot move any faster than they already are.
"I can't work any faster than I'm working, which is day and night," Sen. President Darrell Steinberg (D-Sacramento) said.
Last year, Schwarzenegger vetoed a personal record of 415 bills after a similar threat on a late budget. Many of those bills went through the same vetting process over the last few months and are again at risk of rejection.
Assemblywoman Fiona Ma (D-San Francisco) has 18 bills on the governor's desk that address important issues.
"Public health concerns, safety concerns, saving money, trying to generate revenue, close loopholes to help the budget; so we're worried about the bills, it's been a lot of hard work," Ma said.
But the Governor contends a loss of hundreds of bills doesn't compare to what's at stake.
The fragile Sacramento-San Joaquin delta has made it difficult to send water to Central and Southern California, forcing many farmers to leave their fields empty. It also does not help to be in a third year of drought.
Ryan Ferguson's struggling cotton farm depends on lawmakers coming up with a water plan.
"If nothing happens this year, then we're done next year, we'll be gone," Ferguson said. "It's a third generation company. My grandfather started it."