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Legislative analyst says California governor underestimates revenues by as much as $2 billion

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SACRAMENTO, California — California is likely to collect as much as $2 billion more in taxes in the new fiscal year than Gov. Jerry Brown predicted when he presented his record $113 billion state spending plan last week, according to an independent budget analysis released Tuesday.

That means more money for schools and more reason for advocates to fight for increased spending in the coming months.

The nonpartisan Legislative Analyst said an additional $1 billion to $2 billion is likely barring a sustained stock market slide. Bigger gains amounting to an additional few billion dollars are possible during the fiscal year that starts July 1.

Brown already predicted that next year's budget will be about $2.5 billion higher than what the administration projected six months ago, when the current year's budget was passed.

The governor faces pressure from members of his own Democratic Party to increase assistance to welfare, health care, child care and other social programs, but the analyst cautioned that most of the additional money will go schools and community colleges under the state's Proposition 98 funding guarantee.

The result could be a windfall for schools as state legislators consider the budget in June, Legislative Analyst Mac Taylor and his staff said in the report. He suggested lawmakers may want to start discussing now how they would allocate the large, year-end funding increase to K-14 education.

The California School Boards Association did not immediately comment.

Taylor gave Brown high marks for his long-range efforts to stabilize the state's roller-coaster budget.

Taylor's report called Brown's priority on holding the line on spending "generally prudent" and said it "could help avoid a return to the boom and bust budgeting of the past."

It also praised Brown's proposal to reduce the state's unfunded liability for retiree health care benefits over coming decades, addressing the last of the state's major long term debts.

Without changes, the state's unfunded liability is projected to grow to $300 billion by 2048. But Brown said that the state and its employees should share equally in paying now for future retiree health benefits so that investment returns will help make up the difference.

Department of Finance spokesman H.D. Palmer said the administration is pleased with the positive review, but echoed Taylor's warning that most of any additional money will go to schools. Like Taylor, he said the governor's approach and the rainy-day reserve approved by voters in November should help level budget peaks and valleys.

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Associated Press Writer Judy Lin contributed to this story.

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