SACRAMENTO — Riding a wave of new tax revenue, California's spending plan for the coming fiscal year will rise by nearly $5 billion, a powerful indication that the state that came to symbolize fiscal mismanagement during the heart of the recession is emerging into brighter days.
Gov. Jerry Brown on Thursday proposed a $97.6 billion general fund budget for the 2013-14 fiscal year that wipes out years of deficits and even includes a modest surplus.
The additional revenue hiked the spending plan by 5 percent over the current year and helps the governor pour more money into public schools and universities.
The state's budget shortfall stood at $25 billion when Brown took office two years ago.
"California today is poised to achieve something that has eluded us for more than a decade — a budget that lives within its means, now and for many years to come," Brown said during a news conference at the Capitol.
A rebounding economy coupled with new revenue from the higher sales and income taxes voters approved last November have put the nation's most populous state on a healthier financial trajectory as it begins to turn the corner on an era of deep budget shortfalls and spending cuts to core programs.
California's persistent budget woes came to represent the plight of states struggling through the recession as tax revenue declined steeply, leaving governors and state legislatures around the country little choice but to consider deep cuts or unpopular tax increases.
Brown took both approaches. He pushed an austerity message that forced cuts throughout state government during his first two years in office while persuading California voters to approve increases to the state sales tax and higher income taxes on the wealthy.
Despite the new revenue flowing in, Brown has warned his Democratic colleagues who control both houses of the state Legislature that they must not overplay their hand and spend too freely. The governor wants to build a reserve fund for future downturns to help smooth the type of boom-and-bust budget cycles that have become chronic in California.
"And I'm determined to avoid the fiscal mess that the last few governors had to deal with," Brown said. "The way you avoid it is by holding the line, by exercising a common sense approach to how we spend our money."
His budget contains an $850 million surplus and even drew cautious praise from Republicans, the minority party in the Legislature. GOP lawmakers had opposed Brown's tax initiative and had refused to work with him a year earlier to raise taxes in exchange for pension overhauls.
Republican Assemblyman Jeff Gorell of Camarillo called Brown's proposal a "realistic budget framework." He said Republicans would try to ensure that the state's two four-year higher education systems do not raise tuition for at least seven years — the length of time the higher income taxes on the wealthy will remain in effect.
The University of California and California State University each received $250 million more in the governor's budget proposal.
Brown said Thursday that he wants the higher education systems to avoid charging students more after years of runaway tuition hikes.