Gov. Jerry Brown urged the state to be cautious in spending the windfall, adding that paying down debts is still a priority.
"California has a strong budget. It is a balanced budget, but it is by no means a budget free from liabilities," Brown said.
The governor's budget proposal calls for spending $11 billion to pay down debts and liabilities, including $6 billion in payments that had been deferred to schools and nearly $4 billion to pay down the so-called economic recovery bonds left over from the administration of Gov. Arnold Schwarzenegger.
"When you're at this level of long-term liability, it isn't time to just embark on a raft of new initiatives," Brown said.
His approach appeals to minority Republicans, who generally praised the budget while warning against spending pressure from Democratic lawmakers in the months ahead.
"I like where it's at," said Assembly Minority Leader Connie Conway, R-Tulare. "My fear is that it's not going to stay as constrained as it is right now."
Brown was forced to move the news conference up a day after copies of his budget proposal were leaked to media outlets late Wednesday.
The governor says the surge in state revenue has led California to put back $10 billion into public schools.
The budget, however, does not address long-term liabilities in the state's teacher retirement fund, which will require billions of dollars extra a year to make solvent. Instead, Brown said he wants to create a plan for long-term solvency this year. The teachers' pension fund is estimated to be $80 billion in the red.
The Legislature will debate Brown's proposal in the coming months and faces a June 15 deadline to pass its own spending plan.