Ideally any saltwater tank should include live rock. It is THE FOUNDATION of your filtration. Otherwise all that money you saved not buying live rock, is going to be spent on excess filtration equipment, and actually will probably cost you more in the long run.
There are no substitutes for live rock, but I have been successful "cloning" some.
It takes time and patience, but you can get alot more good quality live rock for alot less money.
I got some good uncured live rock, about 30% of what I actually needed finished. I mean the stuff with the most tube worms and algae that you can imagine. I choose "uncured" because most of the curing process is killing off stuff and I wanted everything I could try to cultivate. I then went to a store that sells rocks and stone for yard use and picked out "holey limestone" pieces that would look nice. Avoid rocks that look cut or have straight edges-the more organic the better. Wash it REAL good.
I used this limestone as the base rock and put the purchased live rock on top and went through the curing process. After 6 months you couldn't tell the difference between the two types.
The key to live rock is 2 things: The live bacteria and animals that inhabit it, and the high surface area in the stone itself for them to live.
Depends on where you are. In my area, for example, there are two shops with tubs of live rock within five miles of my house! Other people, aren't so lucky. Others, live near the dang ocean and can get it very cheap (legally collected, I should hope of course), and then if none of that's an option, there are a bazillion places you can order rock from online. I'll second the above statements as well: I love bargain hunting, but live rock is something you probably don't want to skimp on. It's basically the primary filtration. (In some tanks, it's the ONLY filtration). You can buy dead rock and "seed" it with live rock, also as mentioned, but it takes quite awhile.
Also of note, there is a product, called "Real Reef Rock" that is basically smushed up aragonite that's grown in marine tanks and sold as an environmentally friendly option. However I haven't tried it myself and it's certainly not cheaper than the real stuff.
You can try Craig's list or a local aquarium club. I wouldn't recommend collecting live rock from California unless your tank is going to be the same temperature as the ocean water - the bacteria will be different.
Where are you in California?