Gov. Jerry Brown proposed a $122.6 billion budget plan for California on Thursday that includes billions more in spending for education, health care and state infrastructure, increases the state rainy day fund to $8 billion and takes steps to pay down debts.
"Relative to budgets of the past, this budget is in good shape," Brown said of his 2016-17 spending plan. "We also ought to look at what's the capacity of the state, and what's the taxpayer willingness to spend more."
The budget also includes a $1.1 billion compromise on a new tax on health insurers to replace one that will expire in June. Brown said the tax is critical to maintaining the state health care program for the poor, which is projected to cover 13.5 million people by 2017, nearly a third of the state's population.
The budget would keep tuition flat for another year at University of California and California State University schools, while a voter-approved minimum funding guarantee will send funding for public schools and community colleges soaring along with state tax revenues.
Per-pupil spending would increase to $10,591 under Brown's plan, a $368 per-pupil increase over 2015-16. Brown also wants to direct money from other sources to compensate public schools for earlier lean years, which would increase spending to $14,500 per student in 2016-17.
The substantial investments proposed by Brown's administration underscore the state's soaring economic recovery. The state faced a $26 billion budget deficit when Brown took office in 2011, forcing deep cuts to social welfare programs, schools and universities.
The state's economy is highly reliant on volatile capital gains revenues from the wealthy, which are soaring along with the state's economy, and Brown warned again Thursday of the inevitable boom-and-bust cycle, proposing to end the fiscal year with an $8 billion rainy day fund.
Republicans cautioned against expanding social welfare programs that will require long-term funding. Assembly Minority Leader Chad Mayes, R-Yucca Valley, said the state must not spend money "as if it will reappear every year."
"Democrats should pay attention to the legislative analyst and Governor Brown's warnings about overspending, and balance the need to invest in critical infrastructure projects to improve our roads, schools and dams with one-time money," Mayes said in a statement.
Special funds and bond money will push overall state spending to $170.7 billion, but the Legislature and governor only are responsible for allocating money from the general fund. Brown's announcement sets the stage for a months-long debate with lawmakers over spending priorities.
Despite the large spending increases, Brown acknowledged there is not money for everything on lawmakers' wish lists.
"It's not a candy store where you can pick out whatever you want," he said.
Advocates also have been pushing the state to raise reimbursement for doctors who provide care in the Medi-Cal program, which was cut by 10 percent during the recession. Brown did not propose an increase Thursday.
Senate President Pro Tem Kevin de Leon, D-Los Angeles, said the state afford to can maintain its fiscal stability while helping the most vulnerable Californians.
"We still have to take a closer look at strengthening our health care system for the poor and developmentally disabled that has been starved for far too long," he said in a statement.
Brown called special sessions last year to address the health care tax and a $59 billion backlog in transportation infrastructure spending, but neither gained traction. He said Thursday that he'll get more involved in talks with lawmakers on both issues this year.
He said his administration has been deep in talks with health insurers to come up with a fair proposal to plug the $1.1 billion health care hole. The plan still needs Republican votes.
"We'll get whatever people think is right. It takes a few Republicans to join in with the Democrats," he said.
The budget plan also reflects Brown's transportation proposal to spend $3.6 billion a year on infrastructure improvements, funded through a combination of vehicle registration fees, increases to the diesel and gas taxes, and diverting money from the fees charged to polluters.
Republicans have rejected tax increases, arguing that the state should instead return diverted transportation money and make major cuts to Caltrans.
Associated Press writers Janie Har and Lisa Leff in San Francisco, Justin Pritchard in Los Angeles and Scott Smith in Fresno contributed to this report.