(CNN) — California’s state Senate passed the state’s budget on Thursday and it now awaits approval from the State Assembly, CNN affiliates reported. The budget package addresses a $40 billion deficit and it was passedafter lawmakers agreed to demands from a holdout Republican senator. The package includes tax increases, spending cuts and borrowing to close the deficit, reports said. There had been a stalemate over budget, and it caused California Gov. Arnold Schwarzenegger to declare a fiscal emergency and send layoff notices to 10,000 state workers.