SACRAMENTO (CBS/AP) -- Gov. Jerry Brown on Wednesday delivered dual messages in his annual address to the Legislature: California's resurgence is well underway but is threatened by economic and environmental uncertainties.
Chief among those uncertainties is that the severe drought gripping the nation's most populous state and already forcing water cutbacks among farms and cities eventually could exact a financial toll on the state's improving finances.
In the State of the State address, Brown said it was not clear what role heat-trapping gases have played in creating three years of dry weather, but he said the excessively dry conditions should serve "as a stark warning of things to come."
"This means more droughts and more extreme weather events, and, in California, more forest fires and less snow pack," he said, a week after declaring an official drought.
He urged conservation among the state's 38 million residents and said water recycling, expanded storage and better management of groundwater supplies will be needed. The state's budget reserves will be tested if the wildfire season explodes and communities run short of water and need emergency help.
Some relief could come from an $11.1 billion water bond scheduled to go before voters in November, but the measure is filled with problems, including the price tag. Lawmakers have delayed it twice and are considering major changes, including lowering the price.
The current version has been criticized for including too many unessential, special interest projects and for not guaranteeing money for building dams to create new reservoirs.
Gov. Brown Cites California Resurgence, Uncertainties in State of State Address
The drought also complicates one of Brown's top public works priorities, a $25 billion plan to build two 30-mile tunnels to ship water from Northern California to Central Valley farms and Southern California cities.
The lack of rain and snow, as well as Brown's own statement on Wednesday that California is likely to see diminished Sierra snow packs in the future, have raised questions about whether it's smart to build a project that is designed to send even more water south.
Brown, who has given more State of the State addresses than any other governor in California history, delivered a restrained speech that was largely without surprises.
He touched on the state's financial turnaround after years of budget deficits, and noted his continued efforts to reduce the state's prison population and equalize public school funding.
Brown touted the one million new jobs that have been created in California since 2010 and said the state faces budget surpluses in the billions of dollars for the foreseeable future, thanks to a rebounding economy and tax increases approved by voters in 2012.
Yet he also said California continues to face financial challenges that could imperil its future, including $100 billion in pension liabilities for state workers, teachers and judges, tens of billions more for retiree health care and $65 billion to maintain roads and other public works.
Brown's budget starts paying down some of the state's debt, allotting $11 billion to that purpose, and sets aside $1.6 billion in a rainy day fund. In emphasizing his plea for fiscal restraint, Brown provided a moment of levity when he held up a playing card. One side showed a bar graph of the state's recurring budget deficits, while the other had an image of his dog, Sutter, with a message urging prudence.
The cards, which were handed out to reporters covering the speech, carried various messages attributed to the Welsh corgi, including: "Save some biscuits for a rainy day."
Despite his call for budgetary restraint, Brown will be challenged during his expected re-election campaign to explain why he continues to support the $68 billion high-speed rail project. It has been a priority of his, even as public support has fallen and the sources of money to pay for it become increasingly elusive.
He made only a passing reference to the bullet train during his 18-minute address.
Former U.S. Treasury official Neel Kashkari, a Republican who announced his challenge to Brown on Tuesday, criticized the governor for failing to address poverty, low-performing schools and California's unemployment rate, which has been falling but remains among the highest in the nation at 8.5 percent.
"Instead of doing the hard work of fixing these problems, Gov. Brown is focused on touting record-high spending and building a crazy train that the state doesn't want and can't afford," Kashkari said in a prepared statement.
Brown's other Republican challenger, state Assemblyman Tim Donnelly, said the speech was devoid of solutions for restoring the state's prosperity, repairing its infrastructure and cutting regulations.
"I was shocked by the complete lack of any cognizance of how most Californians feel," he said.
The governor's address came less than two weeks after he delivered his state budget proposal for the fiscal year that starts in July, outlining a vision that embraces frugality even as tax revenue soars to a record level.
The $106.8 billion general fund he proposed is nearly 9 percent more than spending in the current fiscal year. That includes $45.2 billion for K-12 schools, a year-over-year increase of nearly $4 billion.
Brown's vision for how the education money is to be spent -- laid out in last year's address to the Legislature -- is starting to take effect.
Last week, the state Board of Education approved new rules that direct school districts to funnel billions of dollars of new revenue toward schools that serve high numbers of students from low-income families, who are English-learners or are in foster care.
Many Republican lawmakers have embraced Brown's message of frugality while questioning whether his fellow Democrats will go along after years of cutbacks to programs and services they favor.
"I remain skeptical that a majority of Democrats in the Legislature share this vision," said Assemblyman Donald Wagner, R-Irvine, in a statement.
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