I'll vouch everything matt has said. LEDs just costs to much for your project - you would have to spend the hole budget on just the light and even then it might not be a great one.
If you can build a closet at least 3x3 I would recommend a 600w dimmable ballast. This would cover then entire 3x3 area in full flower but you would also be able to use it on the 400w setting during initial flowering and veg to save you some money. You can get a complete 600w system with digital dimmable ballast and sealed air cooled hood for ~$200. If you choose to go this route you will need some type of ventilation - if you don't need to worry about scent than a simple $20 duct booster fan will work.
I would not advise going with HTG - they have great customer service but sell the same crappy Chinese equipment as everyone else but for alot more money. Here is a cheap 400w:
http://www.ebay.com/itm/400w-400-watt-HPS-MH-Grow-Light-System-Set-Premium-Kit-Dimm-Green-House-iPower-/160683199645?pt=LH_DefaultDomain_0&var=&hash=item6b1c7931a8
Cheap 600w system:
http://www.ebay.com/itm/600w-600-watt-HPS-MH-Grow-Light-System-Set-Premium-Kit-/160643087402?pt=LH_DefaultDomain_0&var=&hash=item6b1bebffdf
Most ebay systems are just as good as the HTGs so look around as there are a ton of them for super cheap - remember to spring for the air cooled sealed hoods.
CFLs are by far your cheapest option. You could make a CFL cab with $50 if you do it correctly. Problem with CFLs is that you are limited to plant size and yield. CFLs can be great but need constant moving around and tight tight enclosures to maximize reflection. I would suggest ~400w of CFLs but not much more. One thing to keep in mind with CFLs is the rate at which you can step up your lighting; 400w of CFLs produces about the same as a 250w HID but actually costs much less to run:
I pulled 5.4oz my first grow with CFLs:
15 day veg:
First 10 days @ 18hrs*23w
Days 10-15 @ 18hrs*46w
Total veg kWh: 8.28 kWh
60 day flower:
Days 1-20 @ 12hrs*230w
Days 21-40 @ 12hrs*296w
Days 41-60 @ 12hrs*388w
Total flower kWh: 219.36
Total kWh: 227.64 Total yield in grams: 151.2 g/kWh: .665 g/w: .39
Now lets look at a 400w HID:
400w*18hrs*15days = 108 kWh veg
400w*12hrs*60days = 288 kWh flower
Total: 396 kWh
Over the course of the same grow the 400w would use 178% more electricity so anything less than 270grams and the HID is doing worse g/kWh - I don't know many people than can pull 9.5+ oz from a 400w with just a 15 day veg...
If you choose to go with CFLs stick with the lower wattage bulbs (23-6
. You are better off with more bulbs than fewer larger bulbs as you are able to much more evenly disperse the light. The lower wattage CFLs are also MUCH MUCH cheaper per wattage and more efficient lumen/w as well - I can often find 23w CFLs on sale for $0.25 a bulb