SACRAMENTO, Calif. (AP) — After years of cutting education and social services to close deficits, California's budget is finally in balance as long as state lawmakers follow Gov. Jerry Brown's guidance to hold the line on spending, the Legislature's nonpartisan budget analyst said Monday.
Analyst Mac Taylor commended the Democratic governor for emphasizing fiscal restraint in the proposed spending plan for the 2013-14 fiscal year that he released last week. He urged lawmakers to consider Brown's education reforms, which include transferring more money to poorer districts, and the governor's proposal to expand health care for the poor under the federal Affordable Care Act.
Last week, Brown released a $97.6 billion state spending plan for the new fiscal year and projected a $1 billion reserve. Two months ago, the Legislative Analyst's Office had projected a more cautious outlook that forecast a $1.9 billion deficit.
Taylor said Monday that higher tax revenue, increased savings and repayment of loans account for the slight differences.
"Over the past several years, each January governor's budget has included billions of dollars in proposed solutions ... in order to close budget shortfalls," Taylor wrote in his report. "Now, however, the state has reached a point where its underlying expenditures and revenues are roughly in balance."
He said that while California is on a much better financial footing, uncertainty remains about the federal deficit debate, the state's heavy reliance on wealthy earners, and huge unfunded pension and retiree health care liabilities.
The analyst said lawmakers will get a better picture of the state's finances in the coming months. Lawmakers have until June 15 to send their own budget plan to the governor.
"It's sweet music," said Senate President Pro Tem Darrell Steinberg, D-Sacramento. "Every year for the past four years the story has been very different."
The Democratic leader said the majority party is committed to keeping the budget in balance. But if the economy continues to improve this year, he said there may be opportunities to restore recent cuts.
Under Brown's spending plan, California's budget will increase by nearly $5 billion, largely due to voter approval of his sales and income tax initiative, Proposition 30. By comparison, the state's shortfall stood at $25 billion when Brown took office two years ago.
Despite the fresh tax revenue, Brown wants his Democratic colleagues who control both houses of the Legislature to refrain from overspending. He wants to build a reserve to cushion against future downturns and make strides toward paying down the state's bond obligations.
Brown's finance spokesman H.D. Palmer said the governor will do everything he can to keeping spending in check.
"Living within our means, paying down debt, and strengthening education are the right policy choices for California," Palmer said in a statement. "Given the potential risks to our forecast — both from Washington and overseas — fiscal restraint is a prudent insurance policy."
The governor's plan for the fiscal year that begins July 1 includes $2.7 billion more for K-12 education and community colleges, bringing state and local spending to $56.2 billion.
The University of California and California State University systems each would receive an additional $250 million, which includes $125 million promised for not raising tuition this academic year. California Community Colleges, which has 112 campuses, would receive a $197 million boost.
Brown also projected modest increases in health care and social service programs.
The governor committed to making national health care reform work in California by expanding Medicaid coverage for low-income Californians. He set aside $350 million for the expansion.
His budget also uses $200 million from the judicial branch's reserves to postpone additional court cuts. Hundreds of millions of dollars were previously cut from the court budget. Judges say they want some of the money restored to maintain services.
Los Angeles County Superior Court Presiding Judge David Wesley warned in a statement that he will have to close 10 county courthouses and consolidate other facilities by June 30 because the court will run out of reserves.
"We have run out of options," Wesley said.
Associated Press writer Don Thompson contributed to this report.