For a state budget that wasn't supposed to really offer any surprises, Gov. Jerry Brown surprised a lot of people with the proposal he rolled out on Thursday - a proposal whose secret he managed to keep quiet all the way up until his aides handed out stacks of documents just before he took the stage.
No budget deficit. Zero, zip, nada.
"This is new," admitted Brown in his news conference at the state Capitol. "This is a breakthrough."
The governor's budget chief later explained why the administration has a rosier assessment of things than did the independent Legislative Analyst's Office in November, when it forecast a $1.9 billion shortfall for the coming 18 months.
In no particular order: a different opinion about the payback schedule of money loaned in recent years from state special funds, a different opinion about the local property tax dollars available from the 2012 elimination of redevelopment agencies and thus offsetting some assumed state expenses, and the governor's embrace of a new legislative proposal to use money from last fall's Proposition 39 for public schools - which also offsets the need for additional budget spending.
But even with all of that optimism, and in stark contrast to the last time a governor proudly announced an end to the flow of red ink, Brown admitted there are some submerged obstacles which could again poke holes in the newly seaworthy ship of state.
For starters, there's the looming fiscal cliff saga in Washington, D.C. In addition to the possible federal spending cuts triggered by an automatic sequestration, there's the general worry about the domino effect in California of a national economic whiplash.
The state also faces a lot of uncertainty with the implementation of the federal Affordable Care Act (ACA), better known as Obamacare. "We have a very complex challenge facing us" on the issue, said the governor. While the feds are expected to pick up most or all of many costs in the early stages, there's still some cloudiness on the timing of that money, though at least one new academic study suggests the costs to California state government may not be too bad.
(Even so, there are other questions about the costs and workload to be borne by the state versus its 58 counties; expect a lot of negotiation on that issue in the weeks ahead.)
There's also the chance that judges at the state and federal level could nix portions of the governor's blueprint. That's happened in the past on some of the health and welfare cuts, and 2013 poses the possibility of a showdown over the state's spending on prisons - which would decrease under Brown's new effort to cancel a mandated population cap and court oversight of prisoner medical care.
But also worth watching will be one of the more interesting fights that the governor and his fellow Democrats in the Legislature have been having in the last couple of years: the size of a prudent budget reserve. Brown has consistently wanted larger stashes of cash than have Democrats in the Assembly and Senate. In his 2013-14 plan, the governor proposes $674 million in medical related fees and taxes to help fill the reserve tank up to $1 billion.
Will Democrats give him that large of a reserve? That remains to be seen, especially as there is already clamor from advocates of the poor and disabled who are disappointed Brown's budget doesn't do more to repair what they see as the major holes in the social safety net.
And that gets to the real question: how will the governor use the power of his office - both real and rhetorical - when others push for more? Democratic leaders in the Legislature quickly lined up behind Brown within hours of his budget unveiling, agreeing that now isn't the time for restoration of many of the recent cuts. But no doubt some proposals will make their way to his desk. What will he do?
"I want to avoid the boom and the bust, the borrow and the spend, where we make the promise, and then we take it back," he said to reporters.
Or maybe this catchier quip: "I accept, and embrace, my role of saying, 'No'."
An early test of his vision for state government services is likely to come from disagreements with the University of California and Cal State University's leaders on the appropriate level of state funding. Brown's budget gives both university systems more money, but nowhere near what they've said was necessary to stave off tuition and fee increases.
The budget proposes that the UC and CSU's campuses employ more efficiency programs. And given the recent battles that have been waged over university spending, especially when it comes to compensation for campus presidents and chancellors, this one could provide some fireworks.
The governor isn't the only one talking tough at the outset. Assembly Speaker John Pérez told reporters on Thursday that higher education leaders risked more cutbacks if they moved forward with charging students more.
"If they do," Pérez said on the idea of fee hikes, "they're not going to have all of this money in future budgets."
In general, the governor's 2013-14 fiscal plan is winning support - even if it's not full throated cheers - from most sectors, even on the Republican side of the aisle in the Capitol (where little focus now exists, given their diminished power in the Legislature). Social services advocates and supporters of the judiciary, like Chief Justice Tani Cantil-Sakauye, have been the least cheerful (the governor's new budget grabs another $200 million from court reserves and calls for less spending on more expected court construction needs).
But he appears to have come out of the gate from a strong political position. And by declaring a virtual end to the long saga of huge California budget holes, Jerry Brown may now be daring anyone to come forward and - in essence - take the blame for creating a brand new problem.