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California governor urges fiscal restraint after budget rebound

By Greg Lucas

SACRAMENTO, California (Reuters) - Governor Jerry Brown, hailing what he described as a hard-fought rebound in California's fortunes, used his annual State of the State address on Thursday to urge fiscal discipline to avoid a return to budget deficits and boom-and-bust cycles.

He called on the state Legislature to help him keep his promise to voters to "jealously guard" the billions of dollars in additional revenue made available through passage last year of a ballot measure temporarily extending tax increases.

"This means living within our means and not spending what we don't have," he said. "Fiscal discipline is not the enemy of our good intentions but the basis for realizing them."

He added, "It's cruel to lead people on by expanding good programs, only to cut them back when the funding disappears. This isn't progress. It's not even progressive. It's an illusion. The stop and go, the boom and bust serves no one. We're not going back there."

The Democratic governor said, however, he remained committed to two costly enterprises - completion of a high-speed rail system and construction of two massive tunnels to move water from northern to southern California while restoring wildlife and fish habitat in the Sacramento-San Joaquin River Delta.

Freed up to pursue a broader agenda midway through his four-year term now that the state's budget crisis has been alleviated, Brown also said he would press ahead for passage of his plan to alter the state's formula for funding public schools.

The governor has proposed channeling more of the state's education money to schools in districts with a higher proportion of low-income families and children who speak English as a second language.

"Equal treatment for children living in unequal situations is not justice," he said.

Brown also called for a halt to tuition increases that have driven up the cost of higher education in the state, declaring, "I will not let the students become the default financiers of our colleges and universities."

State Assembly Republican leader Connie Conway said after the speech that she saw "a lot of common ground between Republicans and the governor" in his call for the state to exercise fiscal restraint.

And she said she agreed with the governor's emphasis on investing more in education, as well as his pledge to streamline government regulations for the sake of business growth.

But the chairman of the state Republican Party, Tom Del Beccaro, criticized the governor for not outlining new proposals to stimulate job creation.

(Reporting by Greg Lucas; Additional reporting and writing by Steve Gorman; Editing by Steve Orlofsky)

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