"This year, Californians have a lot to be proud of," Brown told a joint session of the Legislature in his State of the State address. "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."
However, Brown said the state budget is based on fluctuating revenue, and long-term liabilities are high. As he did in his State of the State speech a year ago, Brown offered the cautionary, biblical account of Joseph and the Pharaoh's dream of seven cows.
"Boom and bust is our lot and we must follow the ancient advice, recounted in the Book of Genesis, that Joseph gave to the Pharaoh," Brown said. "Put away your surplus during the years of great plenty so you will be ready for the lean years which are sure to follow."
The 17-minute speech was the final State of the State address of Brown's third term. The 75-year-old Democrat is widely expected to seek re-election, and the speech served to preview his campaign.
Brown has made construction of a $68 billion high-speed rail system a priority of his administration, despite fierce opposition from Republicans. Brown is also seeking to push forward his $25 billion plan to build two tunnels to divert water around the Delta to the south.
A drought emergency Brown announced last week has only heightened controversy around that plan.
Brown said that "among all our uncertainties, weather is one of the most basic. We can't control it. We can only live with it, and now we have to live with a very serious drought of uncertain duration."
He said, "We need everyone in every part of the state to conserve water," and he called for "further progress" on his tunnels plan.
Brown, who promoted environmental policies on a trip to China last year, said he will go to Mexico next.
"California can't do it alone," he said.
Brown, governor before from 1975 to 1983, came into the speech riding the highest public approval rating of his third term. He has not yet said if he will seek re-election, but he has raised millions of dollars for the effort and is the overwhelming favorite in the race.
Following years of difficult budget conditions at the Capitol, 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.
"Fiscal discipline is not the enemy of our democracy but its fundamental predicate," Brown said. "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 used as a prop a playing card depicting years of deficits on one side and a picture of his dog, Sutter, on the other. It said, "Bark if you don't like deficits."
In addition to continuing to push for the creation of a rainy-day fund - a major component of the budget plan he released earlier this month - Brown promoted initiatives championed by Brown in previous years, including California's prison realignment, enacted in 2011, and an education funding overhaul approved last year.
Brown called the education measure, which shifts more money to poor and English-learning students, "a major breakthrough in the way funds are allocated to California's schools so that our laws explicitly recognize the difficult problems faced by low-income families and those whose first language is other than English."
Brown largely avoided an issue on which Republicans have been hammering him in recent months, giving only passing mention to California's nation-high poverty rate.
"We still have too many struggling families, too much debt and too many unknowns when it comes to our climate," he said at the end of his speech. "Overcoming these challenges will test our vision, it'll test our discipline and it'll test our ability to persevere. But overcome them we will and as we do, we will build for the future, not steal from it."
The speech was Brown's 11th State of the State address. Brown, who surpassed Earl Warren as California's longest-serving governor last year, did not deliver a State of the State speech in 1975, his first year in office.
Editor's note: This post was updated at 9:28 a.m. and 10:12 a.m. to include additional remarks by Brown.
PHOTO: Gov. Jerry Brown gives his annual State of the State speech at the Capitol on Wednesday, Jan. 22, 2014. The Sacramento Bee/Hector Amezcua