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California Democrats urge more education spending

Governor Jerry Brown of California speaks at the Center for American Progress 10th Anniversary policy forum in Washington, October 24, 2013.
Governor Jerry Brown of California speaks at the Center for American Progress 10th Anniversary policy forum in Washington, October 24, 2013.

SAN FRANCISCO (Reuters) - Democrats who control California's Assembly said on Wednesday their priorities for the next state budget include more spending on early childhood and higher education and leaving $2 billion in reserve at the end of the next fiscal year.

The plan suggests they would like to tap much of the state's expected surpluses and comes as Governor Jerry Brown, a Democrat, prepares his initial budget plan for the 2014-2015 fiscal year beginning next July. He will present his plan to the legislature next month, followed by a revised plan in May.

After the state's budget watchdog agency last month projected a $5.6 billion reserve for California's next fiscal year if the state's finances improve and its current fiscal policies do not change, Brown urged lawmakers to be cautious in calling for spending increases.

California is seeing a budget surplus after years of deficits following austerity measures and tax increases approved by voters last year.

The tax increases included a hike in the personal income tax rate of the state's wealthiest taxpayers, which is benefiting state coffers thanks to a strong stock market.

Brown has said the state should be using revenue from the wealthy's capital gains prudently, notably for building reserves and paying down debt. Brown's spokesman for budget matters said those two goals are guiding his budget planning.

Outlining the budget priorities of Assembly Democrats, Speaker John Perez said in a statement that he expects to work with Brown and other top lawmakers to have a budget deal for the 2014-2015 fiscal year in place by the legislature's June 15, 2014, deadline.

Assembly Democrats did not detail how much in increased spending they would seek for the next fiscal year. But they projected their budget blueprint would build reserves and produce an $8 billion reserve in the state's fiscal 2016-2017 year.

The Assembly Democrats' blueprint "makes prudent use of one-time funds," Assemblywoman Nancy Skinner, chair of her chamber's budget committee, said in a statement.

California's budget watchdog agency last month recommended the state leaders prepare for the next economic downturn by setting aside money to establish an $8 billion reserve by 2016-2017. The agency also urged paying down unfunded retirement liabilities at the state's pension funds for teachers and university employees.

California could end its current fiscal year with a reserve of $2.4 billion due to stronger than expected revenue from income derived from capital gains, instead of the $1.1 billion projected in its current budget, according to the Legislative Analyst's Office, which tracks the state's finances.

The state controller's office said on Tuesday that state revenues since the start of the current fiscal year through November were $228.1 million ahead of projection in the budget.

(Reporting by Jim Christie; editing by Matthew Lewis)

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