Taking advantage of a growing economy, Gov. Jerry Brown proposed a $164.7-billion budget Friday that would boost funding for schools, community colleges, courts and home care for the elderly and disabled.
He did not include money that University of California leaders say is necessary to avoid a tuition increase, continuing the standoff over the cost of attending the state's most prestigious institutions of higher learning.
The governor is also grappling with higher costs as more Californians sign up for Medi-Cal, which provides healthcare to the poor, under President Obama's signature law. But Brown did not propose higher payments for doctors who participate in the program or set aside money to provide coverage for immigrants who are in the country illegally — two priorities for activists and some top lawmakers.
Nor did he include money for the long-term expense of providing healthcare to retired public workers, although he said he would work with unions to address the issue.
"There's not a lot of money left in the budget," Brown told reporters at a Capitol news conference. "It's very tight."
Brown will negotiate a final budget with the Legislature — contentiously in some areas — for several months, until it can take effect July 1. As in previous years, the state's responsibility — and capacity — to care for poor Californians will be a hotly debated topic. The governor's fellow Democrats have chafed at his reluctance to spend more on government services.
Although a strong stock market and declining unemployment have pumped more money into state coffers, temporary tax increases approved by voters in 2012 are scheduled to begin expiring at the end of 2016. And California remains vulnerable to another economic downturn.
The governor's proposal includes $113.3 billion in general fund spending, a 1.4% increase. There's also $45.5 billion from dedicated funds and $5.9 billion from bonds.
Schools and community colleges would get $2.5 billion more. Courts would get a $182-million increase and Brown would add $483 million to restore a recession-era cut in home health aid.
The governor said he would hold talks with unions representing state workers to plan how to cover the escalating cost of retiree healthcare, estimated at $71.8 billion more than state leaders have set aside.
He wants current employees to pitch in more, as the state would increase its contribution, to fill the funding hole over the next three decades. He did not suggest dollar figures.
In addition, Brown wants new workers to be on the job for longer before they qualify for state-funded healthcare in retirement.
Other long-term costs also loom. Roads, bridges and other facilities suffer from $66 billion in overdue maintenance, and pension funds have gaping shortfalls that state leaders have only begun to fill.
Some expenses can be covered with money from the rainy-day fund measure approved by voters last year. Brown wants to use $1.2 billion of the money to chip away at debts incurred during the recession and leave another $2.8 billion in the bank.
Advocates for the poor and Democratic lawmakers will pressure Brown to spend more on social services, especially with a quarter of the state's population still in poverty.
Brown defended his administration's efforts to help the impoverished, pointing to a proposed increase in funding for disadvantaged school districts, expanded healthcare coverage and higher minimum wages.
"We're doing much more than other states, and we'll continue to do as much as we can," he said.
Mike Herald, a lobbyist for the Western Center on Law and Poverty, described the governor's comments as "a bit of a dodge," noting that welfare payments have not been restored to pre-recession levels.
"It's status quo and, frankly, deeply disappointing," Herald said. "The governor doesn't seem to recognize a lot of the state hasn't recovered."
Some of the most closely watched negotiations of the year will take place with the University of California, where officials are poised to raise tuition 5% annually for the next five years absent more money from Sacramento.
Brown opposes a tuition hike, but his spending plan does not include the extra $100 million that would prevent it. Instead, he included his original offering of $120 million — but that sum would be yanked if student costs increased.
He also urged UC leaders to find ways to cut expenses, saying, "I think the university can be a fine university living within the funds that we've appropriated."
UC President Janet Napolitano said in a statement that she was disappointed in the governor's proposal but described it as "only the first step." She said per-student funding is lower than it was in 1991 even as enrollment has increased.
Times staff writers Howard Blume, Larry Gordon and Carla Rivera in Los Angeles contributed to this report.