California Gov. Jerry Brown urges caution in State of State speech

SACRAMENTO, Calif. -- Gov. Jerry Brown urged fiscal caution Thursday in his State of the State address, calling for lawmakers to beef up California's rainy day fund and pay for long-delayed infrastructure repairs instead of pursuing expensive new programs.

As he did in his budget proposal last week, Brown sought funding for health care and transportation initiatives he previously proposed rather than push for new social programs supported by many of his fellow Democrats. Republicans have opposed his funding plans for those initiatives.

"You are not going to hear me talk today about any new programs. Rather I am going to focus on how we pay for the commitments we have already made," the governor said.

The 77-year-old governor also used his 14th State of the State address to outline the state's "very progressive but volatile tax structure" that tracks a world economy he called profoundly uncertain.

"A slowdown in China or turmoil in Iraq or Syria, or virtually anywhere can send the stock market reeling and put California jobs and state revenues in jeopardy," he said. "The challenge is to solve today's problems without making those of tomorrow even worse."

The Democratic governor also decried wage stagnation he said has plagued many Americans and outlined the state's response that has included an increased minimum wage, stronger wage laws protecting unionized workers and an earned income tax credit.

"We also know that inequality has risen sharply in recent decades," he said. "We've seen the disappearance of many middle class jobs and the growing share of income taken by the top 1 percent and even more so by the top .01 percent."

California has "wholeheartedly embraced the Affordable Care Act," enrolling 13.5 million Californians in Medi-Cal and another 1.5 million in Covered California, he said, calling it an historic achievement that will provide health security to those who could not otherwise afford it.

But those benefits come at a price, he said, noting that total Medi-Cal costs have grown by $23 billion in four years. As a result, he urged lawmakers to build up the state's rainy day fund.

Republican lawmakers responded by suggesting the state can use rebounding revenues to fund programs.

"There was much focus on balanced budgets, but no mention that economic growth is the best way to ensure them in the future," Assemblyman Tom Lackey, R-Palmdale, said in a statement.

Brown is entering his sixth year as governor after previously holding the post from 1975 to 1983. He will leave office after this term, though he joked about using his campaign funds to try to change the state constitution to allow a fifth term.

Brown retains immense political clout, along with at least $24 million in his campaign bank account, which he can use to support or oppose any of a slew of initiatives making their way to the ballot this year.

His priorities include fixing what he called "serious deficiencies" in infrastructure, including state office buildings, levees, parks, universities, prisons and state hospitals. The budget he proposed last week includes using $2 billion of an expected temporary surplus for repairing and replacing aging structures.

He once again urged lawmakers to find a permanent revenue source to maintain roads and bridges that he said now need $77 billion in repairs.

"Sooner or later we have to bite the bullet," he said. "One way or another, the roads must be fixed."

Sen. Jim Nielsen of Gerber, the top Republican on the Senate budget committee, said the state can fund the fixes from existing revenues.

"It does appear that there's going to be additional revenues, particularly for transportation," Nielsen said. "He focused on having to raise taxes for transportation ... We're not going to go along with that part of the program."