UPDATE 2-California governor Brown urges continued fiscal restraint

Wed Jan 22, 2014 5:38pm EST

By Sharon Bernstein

SACRAMENTO, Calif. Jan 22 (Reuters) - California Governor Jerry Brown took credit for his state's fiscal rebound in a state of the state address on Wednesday that also urged continued restraint to lawmakers seeking to rebuild a social safety net tattered by years of tight budgets and economic malaise.

In a speech that could preview the tone of an expected bid for re-election this year, Brown said that California had added 1 million jobs since 2010 and extricated itself from "a financial sinkhole that defied every effort to climb out of it.

"To avoid the mistakes of the past, we must spend with great prudence, and we must also establish a solid rainy day fund, locked into the constitution," said Brown, a Democrat now in a second stint as governor after serving two terms from 1975 to 1983.

Brown, 75, has toed a largely centrist path during this go-round at the state's top job, vetoing several bills, including some gun control measures favored by progressives in his own party - despite Democratic control of both houses of the legislature and the governorship. Brown's speech showed no sign of a change in that course.

The onetime seminarian, who is widely expected to seek re-election, touted changes to the way the most populous U.S. state funds education, channeling more money to districts with disadvantaged students and allowing more local control over how the dollars are spent.

He also called on regulators to loosen some water distribution rules to help California farmers and cities deal with a nagging drought, which he declared as an emergency last week.

Brown blamed the drought in part on climate change, and predicted increases in the wildfires that plague the state, along with a continued decrease in the Sierra snowpack that provides water to its streams and reservoirs.

"We do not know how much our current problem derives from the build-up of heat-trapping gasses, but we can take this drought as a stark warning of things to come," Brown said.

POLICY AGENDA

In the speech, Brown barely mentioned one of his key projects, a proposed high-speed rail line to connect Los Angeles with San Francisco. He also shied away from any mention of fracking, the oil and natural gas drilling procedure in which water and chemicals are injected into rock formations.

Outside, environmental activists protested the governor's support of some fracking in the state, some carrying signs saying, "No fracking way."

Brown did, however, encourage conservation and the development of new technologies to wean the state off of fossil fuel, prompting applause from the largely Democratic lawmakers and their guests.

Earlier this month, Brown took a stern line on fiscal restraint when he released his $107 billion budget plan, potentially inviting a fight with some progressive state lawmakers of his Democratic Party who want to restore spending on social programs cut during the long economic downturn.

Key issues facing the state as it emerges from the economic slump include the cost of higher education, the quality of California's once-vaunted public K-12 schools and an ongoing struggle over conditions in its massive prison system.

State Republican leaders said they welcomed Brown's vision of fiscal restraint, but differed on how to implement it.

Assembly Republican leader Connie Conway called for paying down more debt with the projected multibillion-dollar surplus, rather than boosting spending on social programs or high-speed rail.

State Senator Bob Huff, who leads the Republican caucus in that body, urged support for a plan to temporarily ease restrictions in the federal Endangered Species Act on removing water from the fragile Sacramento-San Joaquin River Delta. The plan would allow more water to flow to drought-parched farms and cities.

"Sometimes we have to realize that human beings are animals, too," Huff said.

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