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SAN FRANCISCO CHRONICLE.  JAN 10, 2013. For the first time in five years, California is not facing a deficit as Gov. Jerry Brown and lawmakers work to put together a spending plan for the next fiscal year.

Brown released his budget Thursday morning for the 2013-2014 fiscal year, proposing a $97.7 billion plan that is 5 percent higher than the current year’s spending.

“California today is poised to achieve something that has eluded us for more than a decade – a budget that lives within its means, now and for many years to come,” the governor wrote in his budget message to the Legislature, saying voters made this possible by approving Proposition 30.

The plan increases funds for K-12 schools, and districts “serving those students who have the greatest challenges will receive more generous increases – so that all students in California have the opportunity to succeed,” the governor wrote.

The governor also proposed spending increases for the University of California and California State University systems. Both were guaranteed $125 million because of the passage of Prop. 30 and a deal struck last year to avoid tuition increases in the current school year if the measure was approved.

In addition to those funds, Brown proposed giving each university system $125 million. Both systems had requested increases above the guaranteed Prop. 30 money of several hundred million dollars, with CSU officials wanting $372 million more and UC asking for $292 million more. UC officials have said that tuition and fees will increase if they don’t get about $127 million of what they requested.

Even though the state no longer faces a deficit, it still owes nearly $29 billion to schools and local governments – and other groups – due to a past pattern of deferring payments. Brown proposes to begin paying that so-called “wall of debt” back by more than $4 billion a year each year beginning in 2013-14.

Brown’s budget proposal could have been starkly different had voters rejected Prop. 30. He would likely have had to rely on large spending cuts to close a gap that would have been created without those new taxes.

Instead, as much as $6 billion per year through an increase in income tax on high earners and the sales tax on everyone is available to balance the budget.

The budget represents a massive change for California’s finances, which at their worst in February 2009 faced a $42 billion deficit. That resulted in emergency action on the budget as the state treasurer was unable to sell short term bonds, construction projects came to a halt and the controller was forced to send out IOUs instead of tax return checks.

While that is in the past, the state’s finances are still recovering and Brown already declared 2013 “the year of fiscal discipline and living within our means.”

That’s not likely to please advocates of various state programs, who have been seeking restoration of budget cuts from previous years. Health and human services advocates are planning rallies around the state Thursday in response to the proposal.

The spending plan now moves to the Legislature, with budget committees in the Senate and Assembly likely holding initial hearings later this month. Subcommittees will get into line-by-line examination until the governor releases a revised proposal in May.

That proposal will reflect any change in the outlook for California’s finances. The Legislature faces a June 15 constitutional deadline to pass a budget for the fiscal year that begins July 1. If they fail to do so, lawmakers lose their pay until it is passed.