Gov. Jerry Brown outlined his priorities for California Wednesday morning in an annual State of the State address that comes amid new challenges for a state that has turned budget deficits into surpluses.
Read: Full Text of Speech
In a speech that touched on the same fiscal restraint themes in his budget proposal announcement earlier this month, Brown talked about California's projected multibillion-dollar budget surplus and its potential impact on the state's nearly $355 billion in unfunded liabilities and debts. But with wildfire dangers growing and many communities running short of water, California's drought and environmental uncertainties could drain some of the funding he had hoped to devote to paying down debts or setting aside in a rainy day fund.
Brown opened the speech by highlighting the state's financial situation -- what he called years of "improvident tax cuts and too much spending" that created a financial sink hole followed by financial balance. He then held up a picture of his dog, Sutter, to "keep our spirits up" as he talked about a need for spending restraint.
"It occurred to me that these critics -- who have long recited our state's decline -- perhaps have nothing to say in the face of California’s comeback, except, 'Please, don't report it,'" Brown said. "Well, I'm going to report it, and what a comeback it is.
"But we are not out of the woods and we certainly are not out of the drought. Life is uncertainty, the climate is changing – not for the better – and the business cycle and the stock market are historically volatile, with good years followed by bad, with painful regularity."
The speech in front of lawmakers comes after last week's drought emergency declaration -- something lawmakers had urged Brown to do as the state's water reservoirs levels are strained with no rain in the forecast. California is on pace for the driest January on record. The all-time low rainfall record in January occurred in 1984, when just 0.3 inches of rain fell across California.
House Speaker John Boehner was scheduled to visit the Central Valley Wednesday to propose emergency legislation aimed at drought relief.
"Among all our uncertainties, weather is one of the most basic," Brown said. "Right now, it is imperative that we do everything possible to mitigate the effects of the drought. I have convened an Interagency Drought Task Force and declared a State of Emergency.
"We need everyone in every part of the state to conserve water. We need regulators to rebalance water rules and enable voluntary transfers of water and we must prepare for forest fires."
Brown is facing scrutiny for continuing to promote California's $68 billion bullet train project and will be pushed by Democratic lawmakers who want to spend some of California's record tax revenue on their own projects. Brown only briefly mentioned the rail project during the 17-minute speech.
About two weeks ago, Brown delivered a budget proposal for the fiscal years that begins in July. He called on lawmakers to embrace frugality as tax revenues soar to record levels.
The $106.8 billion general fund he proposed is nearly 9 percent more than spending in the current fiscal year. That includes $45.2 billion for K-12 schools, a year-over-year increase of nearly $4 billion.
Brown's vision for how that education money is to be spent, laid out in last year's State of the State address, already is starting to take effect. Last week, the state Board of Education approved new rules that direct school districts to funnel billions of dollars of new revenue toward schools that serve high numbers of students from low-income families, who are English-learners or are in foster care. The additional money is generated partly by temporary increases in sales and income taxes that Brown persuaded voters to approve in 2012.
Brown will likely spend much of the first half of the year in arguments over spending with Democratic lawmakers, many of whom want more money for their own priorities. After years of program cutbacks, many are anxious to restore funding for some existing programs and launch new ones.
Senate President Pro Tem Darrell Steinberg, D-Sacramento, for example, wants to add transitional kindergarten for all 4-year-olds, an initiative that would require billions of dollars a year.
The governor has not yet declared whether he will seek re-election. It would be his last term as governor after serving from 1975 to 1983 then returning to the office in 2011.