California Gov. Jerry Brown on Thursday dialed back his proposed cuts for schools and child care, citing an improved fiscal outlook since January that could cover $1.5 billion more in general fund spending.
Most of that money would go to K-12 education. He's also rolling back a plan to cut a half-billion dollars for child care for low-income families.
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The release of Brown's revised $124 million spending plan kicks off a month of negotiations with the Democrat-controlled Legislature that must approve a budget by June 15.
The plan retains other cuts proposed in January that have angered Democratic lawmakers, and Brown warned that the state could face a severe shortfall from an economic downturn or federal budget cuts sought by President Donald Trump and Republicans in Congress.
Assemblyman Phil Ting of San Francisco, who chairs the budget committee, said Assembly Democrats will look to preserve a middle-class scholarship program; use tobacco tax money for payments to Medi-Cal doctors; and seek to increase funding for subsidized housing, debt-free college and reducing poverty.
"With Washington pursuing an agenda of self-sabotage, our budget must protect California," Ting said in a statement.
The governor, however, warned again that California is overdue for a recession that could pummel the state budget that relies heavily on taxing the income and investment gains of wealthy taxpayers.
"We've got ongoing pressures from Washington, and the economic recovery is not going to last forever," Brown said, stressing that he doesn't think further increases in spending will be possible.
The Democratic governor staked out a conservative opening position in January, projecting a $1.6 billion deficit that the Legislature's budget experts said was excessively cautious. The projected deficit in his new plan is $400 million, due mostly to improved capital gains revenue.
Brown also proposed going forward with plans to boost wages for subsidized child-care providers by $500 million, reversing his January proposal to cancel the increase.
He backed away from a proposal to shift $600 million in costs to counties to provide care for seniors and people with disabilities. After negotiating with county officials, Brown's latest proposal would shift $141 million next year, a figure that will grow to $250 million in four years.
"We're trying as much as possible to keep us on an even keel," Brown said in reversing his proposed cuts for K-12 schools. By law, about half the state's spending goes to K-12 education and higher education.
Still, Brown stood his ground on other elements of his January budget that irritated lawmakers and powerful interest groups, including the elimination of the middle-class college scholarship program.
He also retained his plan to use the money from last year's voter-approved tobacco tax increase to pay for normal growth in health care costs instead of increasing payments to doctors who treat patients on Medi-Cal, the publicly funded health plan that covers 1 in 3 Californians.
Assembly Minority Leader Chad Mayes, a Yucca Valley Republican, called that plan "a bait and switch," saying the tax increases were meant to fund health and dental care and support schools, not general state spending.
The governor's new proposal also includes keeping $50 million from the University of California to "hold their feet to the fire" following a scathing audit. Brown proposes releasing the money once administrators show they've made progress on spending recommendations and other reforms.
Brown also wants to give the attorney general's office an additional $6.5 million to hire 31 people for its work suing the federal government over Trump's policies.
Brown and lawmakers will debate the budget during significant uncertainty about the state's financial future.
Revenue growth has slowed since last summer, coming in $1.8 billion below last June's projection.
Meanwhile, Republicans in the U.S. Senate are debating an overhaul of former President Barack Obama's health care law, which California embraced to add nearly 4 million people to Medi-Cal.
Under the bill passed by the House last week, federal funding for Medi-Cal would fall by $6 billion in 2020 and by $24 billion by 2027, Brown said.
AP writers Don Thompson and Sophia Bollag contributed.