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California governor pushes paying down debt over safety net in budget

California Governor Jerry Brown holds a playing card detailing the state's fluctuating budgets during his State of the State address at the
California Governor Jerry Brown holds a playing card detailing the state's fluctuating budgets during his State of the State address at the

By Sharon Bernstein

SACRAMENTO, California (Reuters) - California Governor Jerry Brown struck a fiscally cautious note in his mid-year revision of the state's budget on Tuesday, emphasizing paying down debt over the social programs demanded by many fellow Democrats.

Brown's $156.2 billion plan is the kickoff for what is expected to be intense election year wrangling over spending at a time when the state is in its best fiscal condition in years, and the governor's continued message of austerity has rankled many in his party.

"I invite everybody to scrutinize," Brown told a news conference at the state Capitol. "If you can find more cookies in the jar, hallelujah."

Brown said his plan includes improvements to the state's sagging social safety net, cut back during the economic downturn and ensuing years of multi-billion dollar budget deficits.

Those increases have not been enough to satisfy Democrats who dominate both houses of the legislature.

"As we finalize the budget over the next few weeks, we will also look to expand opportunity by combating child poverty, improving access to higher education, increasing funding for transportation projects, and taking strides to expand affordable housing," said San Diego Democrat Toni Atkins, who was sworn in Monday as speaker of the assembly.

Brown's proposal estimates that revenues to the state's general fund will be $104.6 billion for the current fiscal year and about $109 billion for the 2014-2015 year, which begins in July. That is about $2.4 billion higher over the two years than projected in an initial budget plan in January.

Brown said key expenses have increased during that time, including a rise in the state's share of healthcare spending for the poorest Californians through Medi-Cal.

For the coming fiscal year, Brown proposes raising spending on state courts by 8.3 percent, and increasing environmental protection spending by 23.5 percent. General fund spending would go up 4.3 percent for K-12 education, to $44.7 billion, and 10 percent for higher education, to $12.5 billion.

The governor would also spend $1.6 billion paying down bond debt, and $73.2 million to help shore up the state teachers retirement fund.

The plan received a cautious welcome from the state's Republican leadership. Connie Conway, the top Republican in the Assembly, questioned spending $250 million on his plan for a high speed rail line to connect Southern California with San Francisco and Sacramento. But she praised his push for paying down debt and establishing a rainy-day fund.

"The toughest job for the governor is going to be dealing with his own party," she said.

(Reporting by Sharon Bernstein; Editing by Cynthia Johnston and Andrew Hay)

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