SACRAMENTO, Calif. -- Gov. Jerry Brown signed a state spending plan for the coming fiscal year Thursday that makes budget-busting deficits a distant memory, funnels billions of additional dollars to K-12 schools and begins restoring social service programs that were cut during the recession.
The budget also expands Medicaid to an additional 1.4 million low-income Californians, adopting an optional provision of the federal Affordable Care Act.
"This is a momentous occasion, because we have a balanced budget not proposed but actually actualized, the first time in probably a decade or more," the governor said moments before signing the spending plan for the fiscal year that starts Monday.
It includes a $96.3 billion general fund, the state's main account for paying ongoing expenses. The size of the general fund and a reserve account of $1.1 billion reflect the continuing recovering of California's economy and $6 billion in voter-approved taxes.
Declining tax revenue during the recession had cut the general fund to as low as $87 billion just two years ago, requiring lawmakers to make deep spending cuts.
The Democratic governor declared it "a big day" for public school students and those who have no health insurance or inadequate coverage.
The budget for the coming fiscal year adopts a new funding formula for public schools that will send more money to districts with disadvantaged students. It also expands Medicaid so the health care program for low-income residents could grow over the next few years to cover 9.8 million Californians, roughly a quarter of the state's population.
Democratic lawmakers said the move will save lives, keep workers healthy and bring billions of dollars from the federal government into the state.
California Secretary of Health and Human Services Diana Dooley said the Medicaid expansion was a piece of legislation that "the president made possible but we have to make real in California."
Republican lawmakers raised concerns about whether the state can afford the expansion over the long run, especially once the federal government reduces its commitment. It will pay 100 percent of the cost for the new enrollees initially, but that eventually will drop to 90 percent.
Democrats included a provision in the legislation that allows for future lawmakers to reconsider the expansion if the federal government's share drops below 70 percent.
The centerpiece of this year's budget is Brown's priority to reshape California's funding formula for K-12 schools as a way to help close the achievement gap for poor and minority students.
The budget allocates $2.1 billion to begin moving the state to a new formula that gives proportionately more money to school districts with high levels of low-income students, those with limited English proficiency and foster children. School districts also will get more control over how to spend state aid.
Democrats say districts will be held accountable for how they spend the money, such as requiring them to create master plans to track the success of English learners. But Republican lawmakers have said the budget package lacks a requirement that the money be used on services and program that have proved effective.
Overall, the budget boosts K-12 and community college funding to $55.3 billion. The governor's budget says that represents an increase of more than $8 billion over the 2011-12 fiscal year.
The budget for the coming year also gives the University of California and California State University systems an additional $125 million each, while restoring $63 million to the state court system.
Democratic lawmakers were able to restore some of the programs that were slashed during the recession for mental health treatment, health care for the poor and higher education -- a move criticized by Republicans.
"Keeping promises to the people of California on education funding and paying off our state debt load so as not to burden future generations with our mistakes should have been the first priority, but unfortunately that did not happen," Senate Minority Leader Bob Huff, R-Diamond Bar, said in a statement Thursday.
Brown made no general fund cuts in his line-item vetoes, the first time a governor has done that since 1982, when Brown did it during his previous time in the governor's office. However, he removed nearly two dozen appropriations as a way to reduce state mandates that could saddle the state with future obligations.
He reduced $40 million in earmarks, a majority related to special education and preschool programs. Finance officials say that money will instead be used for other education purposes.
Brown announced Thursday afternoon that he signed 17 other bills as part of implementing the budget. The Assembly also sent the governor his proposal to revamp a local economic development program known as enterprise zones.
Assembly Speaker John Perez, who joined Brown and Senate President Pro Tem Darrell Steinberg at the budget signing, said the spending plan reflects fiscal responsibility, policies to help the middle class and providing services for the needy. He championed a program in the budget that will provide scholarships to middle income Californians as a way to reduce the costs of higher education.
Beginning in the 2014 academic year, California will establish a Middle Class Scholarship program that reduces student fees on a sliding scale based on income -- up to 40 percent for families making less than $100,000 and up to 10 percent for families earning $150,000. The appropriation would be capped at $305 million annually once it is fully implemented.
"It is a budget that says that the fiscal health of the state is on the mend," said Perez, D-Los Angeles.