The Senate budget committee is scheduled to begin reviewing Brown's spending plan this week, while the Assembly has a hearing slated next week. But given that $4 billion is no rounding error -- equal to about 80 percent of what the state spends annually on the California State University system -- it is hard to make decisions on spending or cuts.
Brown and Democratic lawmakers burned themselves before after momentary blips in revenues. Desperate for a compromise after a Brown budget veto, they projected that California would receive $4 billion extra in 2011-12. They felt comfortable with that estimate based on $1.2 billion in excess cash in May and June 2011.
But that money never came, forcing some midyear trigger cuts and additional reductions in the next budget.
Brown this month proposed a budget that increases spending for education while mostly holding the line for other state programs.
"As we always caution, you can't drive a long-term trend off of one month of data, good or bad," said Department of Finance spokesman H.D. Palmer.
Senate President Pro Tem Darrell Steinberg has said earlier that any extra money the state receives should be split between a rainy-day reserve, paying off debt and expanding state programs. The Senate leader has talked specifically about restoring dental benefits for low-income adults, which were cut during the recession.
"There's no question that California is back in the black, and this is all good news," Steinberg, D-Sacramento, said. "I think the question is how good is this news? My reaction, on behalf of my caucus, is to still be relatively cautious until we get more information."
Los Altos-based California Common Sense issued a report Monday that showed annual revenue projections made by governors in January were inaccurate by a median error of 4.7 percent.
If the state continues to see excess revenues, Williams said lawmakers should consider creating a large reserve as a buffer in case today's big payments result in shortfalls later. Like others, Williams has warned for years about the dangers of tax volatility.
But he said state leaders often can't resist temptation.
"Once the money goes in the bank," Williams said, "it has been very difficult historically for California not to commit it."