Governor signs $108 billion budget that pays down debt, adds preschool, other spending

Gov. Jerry Brown on Friday signed California's $108 billion budget for the coming fiscal year that pays down debt, builds a rainy day fund and provides additional money for schools and health care.

Brown signed the budget in a crowded, sparsely furnished press room at San Diego City Hall, flanked by lawmakers including Assembly Speaker Toni Atkins, a Democrat from San Diego.

"California is demonstrating that the majority can actually govern, unlike Washington, which is mired in gridlock and partisanship and extreme polarization," Brown said, adding that Democrats had "a lot of cooperation from the minority party as well."

Brown said the budget lowers debt, invests in public schools, shores up the teachers' pension fund and guards against another economic downturn. He said he doesn't anticipate tapping the rainy day fund while in office.

"It's certainly going to be untouchable for the next 4½ years if the election turns out as I think it will," he said, alluding to his re-election bid.

Republican gubernatorial candidate Neel Kashkari said Brown's budget represents more of the same back-room dealing in Sacramento.

"Despite the nation's highest poverty rate and a failing education system, Gov. Jerry Brown today signed the largest budget in state history that is nothing more than a giveaway for special interests paid for by working families," Kashkari said in a statement.

The budget for the fiscal year that starts July 1 is built on temporary tax increases and surging revenue from the booming stock market.

Republican lawmakers called the 2014-15 fiscal year spending plan a mixed bag. They praised the use of a more conservative revenue projection while criticizing spending on permanent programs that they say could be difficult to maintain once temporary, voter-approved tax increases expire in a few years.

Here is where the money is directed:

— Lawmakers agreed to Brown's plan to set aside $1.6 billion for the state's rainy day fund and approved companion legislation to start reducing $74 billion in unfunded teacher pension liabilities.

— Spends $264 million for free preschool and day care for low-income families. The preschool program eventually will serve half of all 4-year-olds in the state, about 234,000 children.

— Increases the maximum aid allowed under California's welfare-to-work program, CalWORKS, by 5 percent starting next April.

— Includes $1 billion to cover higher-than-expected Medi-Cal enrollment rates as part of the federal Affordable Care Act's Medicaid expansion.

— Relatives and workers who care for the elderly and people with disabilities outside of nursing homes will be entitled to overtime pay.

— Gives $250 million this year and a quarter of future revenues from California's greenhouse gas emissions law to the $68 billion high-speed rail project.

Despite broad authority to veto items in the budget, Brown issued just a handful of changes mainly to clean up legislation.

He reduced by half the state staffing responsible for making sure insurance plans provide mental health coverage at the same level as medical conditions to save $2.5 million. He removed $700,000 for a teen driver safety study because the program is already underway.


Associated Press writer Judy Lin in Sacramento contributed to this story.