SACRAMENTO -- Gov. Jerry Brown today unveiled the first good-news state budget California has seen in years, which he said boosts investment in education, implements health-care reform and maintains fiscal stability while projecting surpluses for years to come.

The budget pays down debt and creates a $1 billion reserve, the governor said, offering a degree of stability the Golden State hasn't seen in more than a decade.

"This is new; this is a breakthrough," he said, though he acknowledged the state still faces budget risks that include a huge federal deficit, an uncertain economic recovery, federal or court blockage of proposed state budget cuts, and potential increases in health care costs.

Jerry Brown, Jan. 8, 2013. (Photo/Rich Pedroncelli)
Jerry Brown, Jan. 8, 2013. (Photo/Rich Pedroncelli)

The spending blueprint also increases state funding per student in K-12 schools by $2,700 by 2016-17, reversing years of decline. Funding for K-12 and community colleges increases by $2.7 billion next year and by $19 billion by 2016-17, due in large part to the success of Brown's tax measure, Proposition 30, on November's ballot.

The budget increases state funding for the University of California and California State University systems by $250 million, a 5 percent hike, and proposes a multi-year funding plan to strengthen those systems while ensuring affordability and reducing student debt.

And the budget implements federal-health care reforms, expanding coverage by simplifying Medi-Cal eligibility and extending coverage to childless adults and uninsured parents.


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The governor's proposed budget projects an $851 million operating surplus in 2013-2014; a $47 million surplus in 2014-15; $414 million in 2015-16; and $994 million in 2016-17.

That's a far cry from the outlook just two years ago, when the state was projecting deficits of $19.2 billion in the current budget year, $17.4 billion in 2013-14 and $21.5 billion in 2014-15.

"The boom and bust in our state's budget over the last decade is something we should not repeat," the governor's budget summary concludes. "Instead, the state must live within its means, pay down debt, and build up a 'rainy day' fund -- all to ensure a stable government that earns the respect of the citizens that pay for it."

Brown said the future of California's K-12 education system depends on giving more funding to schools that face disproportionate challenges, such as poverty or high numbers of English language learners.

"Treating unequals equally is not justice," Brown said. "Growing up in Compton or Richmond is not the same as growing up in Los Gatos or Beverly Hills or Piedmont."

Brown said he believes the state can reduce its "wall of debt" from $27.8 billion at the end of this current fiscal year to $4.3 billion by the end of 2016-17.

"We're on the road to sustainable balance," Brown said. "It will not be easy, there will be some disagreements, there will be some heartburn, but I'm here to get done what I think is compassionate and what is good for the state of California."

So California's deficit is gone thanks to bone-deep cuts in every sector of state government and seven years of new taxes from Proposition 30, Brown said: "We're in a better place."

But Brown said it'll be his difficult job to say "no" to over-exuberant lawmakers who want to boost spending across the board again.

"Yes, there's inequality out there and yes there's hardship," Brown said, but it's time to invest in education to solve such programs for decades to come -- better return on the state's investment.

Convincing lawmakers to keep spending reigned in will "require a lot of charm," Brown acknowledged.

State worker contracts are up for renewal this year, and Brown said his administration will go into those negotiations with an open mind but with resolve that the state live within its means.

Brown declined to guarantee Thursday that state university students won't see any tuition increases.

"Guarantees are not part of this world that we live in," Brown said, but he said he'll visit with the UC Regents and CSU trustees to discuss ways of avoiding any increases.

"I want to move diplomatically but carefully," he said of working with the universities' boards. "Everybody's going to have to pull together -- administrators, the leadership, professors and the rest of them."

Fiscal discipline means taking care of the people's needs over the long term rather than throwing a bunch of money out there now and suffering a financial hangover afterward, Brown said.

What Brown describes as an austere budget still represents 5 percent spending growth over the current year, but Brown said the state still is spending less per capita than it did for decades.

America is in a big financial mess, and some "characters... have written California off as a failed state," Brown said, yet the state is finding creative ways to deal with challenges ranging from an aging population to climate change.

That requires "fiscal discipline and imaginative investment," he said. "California can be the model, and to do that we have to keep Republicans and Democrats on a playing field that gets us to the end."

Josh Richman covers politics. Contact him at 510-208-6428. Follow him at Twitter.com/josh_richman. Read the Political Blotter at IBAbuzz.com/politics.