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Copyright 2014 Sacramento Bee (California) All Rights Reserved Sacramento Bee (California) January 23, 2014 Thursday LENGTH: 780 words HEADLINE: Jerry Brown heralds California 'comeback,' urges caution in State of the State speech BYLINE: BODY: Positioning himself in his State of the State address for a likely re-election bid this year, Gov. Jerry Brown on Wednesday heralded a California "comeback" marked by budget surpluses and an improving economy. Yet Brown urged caution in the face of long-term financial challenges, urging lawmakers to "pay down our debts and remember the lessons of history." "Fiscal discipline is not the enemy of our democracy but its fundamental predicate," he told a joint session of the Legislature. "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." Brown, governor before from 1975 to 1983, has not yet said if he will seek re-election, but he is raising millions of dollars for the effort and is widely expected to run. His election-year speech was one of the least expansive of his third term, adhering closely to a message of financial discipline he has cultivated since taking office in 2011. The speech comes after Brown this month proposed a $154.9 billion spending plan that includes modest increases for social services and schools, but also billions of dollars to address long-term debt. "This year, Californians have a lot to be proud of," Brown said. "For a decade, budget instability was the order of the day. But three years later, here we are - with state spending and revenues solidly balanced, and more to come." More pedestrian in his rhetoric than in other years, Brown produced a playing card with a chart of past budget deficits on one side and a photograph of his Pembroke Welsh corgi, Sutter, on the other. David Siders;

Page 2 Jerry Brown heralds California 'comeback,' urges caution in State of the State speech Sacramento Bee (California) January 23, 2014 Thursday

It said, "Bark if you hate deficits!" The reaction from the Democratic-controlled Legislature was predictably positive. Assembly Speaker John A. Pérez said "there's great unanimity in the notion of fiscal responsibility," and when asked if there were any surprises in Brown's speech, he said, "No." But Brown has been criticized by some Democrats and social service advocates eager for more spending after years of budget cuts in the recession. Sen. Ed Hernandez, D-West Covina, suggested the potential for tension during budget talks this year. "My sense is he's going to take his fiduciary responsibilities very, very seriously and not expand very many programs," Hernandez said. "I agree that we need to put money aside, but we also have to look at restoring some services that were cut very heavily in the bad times." In a speech lasting about 17 minutes, Brown acknowledged the risks of climate change and a drought emergency he declared last week, as well as billions of dollars in retiree health care liabilities, infrastructure expenses and future "uncertain costs" of the federal health care overhaul. Brown gave only passing mention to the public works agenda he has made a priority of his administration, including a $25 billion water plan and $68 billion high-speed rail project - both flashpoints for controversy. Instead Brown recounted legislative accomplishments of his term, including a sturdier budget, prison realignment, in which the state shifted responsibility for certain offenders to counties, and an education funding overhaul enacted last year. The effect was a speech bereft of lyricism that has characterized some of Brown's previous addresses, in its place a "workmanlike, good job," political analyst Barbara O'Connor said. "I think his speech was exactly the right tone, acknowledging that he is really the turnaround king but not making him sound like a cheerleader," she said. "You can claim success and take credit without being lofty, and that's kind of what he did." Two Republicans bidding to unseat Brown immediately criticized the governor for failing to mention California's nation-high poverty rate in the address. Brown mentioned "struggling families," but only briefly. "Governor Brown may claim a California comeback, but the truth is that he has forgotten the millions of California families who are struggling," Neel Kashkari, who announced his candidacy Tuesday, said in a prepared statement. The only other Republican actively campaigning against Brown, Assemblyman Tim Donnelly, R-Twin Peaks, said in a prepared statement that Brown "has repeatedly failed to address how he intends to get the state back to work and return prosperity to California." Republicans have heightened criticism of Brown on the economy since the U.S. Census Bureau reported a California poverty rate of 23.8 percent under a calculation that includes the cost of living.

Page 3 Jerry Brown heralds California 'comeback,' urges caution in State of the State speech Sacramento Bee (California) January 23, 2014 Thursday

Call David Siders, Bee Capitol Bureau, (916) 321-1215. Follow him on Twitter @davidsiders . Jeremy B. White and Laurel Rosenhall of The Bee Capitol Bureau contributed to this report. LOAD-DATE: January 25, 2014

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