Both houses of the Democratic-controlled Legislature worked to craft budgets Friday that are about $3.2 billion higher than the one proposed by Gov. Jerry Brown.
The development sets up a clash with the governor from their own party.
"We think that could threaten the significant fiscal progress we've made that has finally brought the budget into balance," said H.D. Palmer, state Finance Department spokesman.
The windfall was projected by Legislative Analyst Mac Taylor based largely on sharp recent increases in the stock market and differences with the Governor's Office in predicting near-term economic prospects.
The Senate Budget Committee voted along party lines Friday to accept Taylor's rosier forecast. The Assembly released a budget outline assuming the same $3.2 billion hike.
The Assembly and Senate are scheduled to create a conference committee next week to hammer out a joint budget proposal.
Because Democrats control a supermajority in each house, they can pass a budget without GOP support.
Leaders of both houses want to use much of the additional $3.2 billion to boost education spending, increase reserves and pay down debt, but each house has its own short list of public programs to bolster as well.
"We're very sensitive to maintaining a balanced budget with a prudent reserve," Senate President Pro Tem Darrell Steinberg said.
"On the other hand, there's been a lot of damage done the past five years," he said. "We want to focus on a few areas where people have been hurt the worst and see if we can begin helping them."
The Senate plan would commit $131 million to restore Medi-Cal adult dental benefits; provide $250 million for career-based education; and boost mental health services by $206 million consisting of $142 million in general funds and $64 million in special and federal funds.
The Assembly's plan, to be weighed Tuesday by the Budget Committee, would allocate $500 million to provide middle-class college scholarships, bolster child care programs and increase welfare-to-work payments.
Leaders of both houses propose $100 million in additional court funding.
Republican Sen. Jim Nielsen, of Gerber, said that assuming $3.2 billion in additional state revenue is dangerous and sends the wrong signal. "It absolutely, unequivocally invites rather, guarantees more proposals to spend," he said.
Neither the Senate nor the Assembly is backing a suggestion by Taylor to alter state law in a way that would slow an existing commitment to funnel $2.4 billion of the projected $3.2 billion in higher revenue to schools.
The Senate Budget Committee voted Friday to change a portion of Brown's proposed Local Control Funding Formula, however, in a way that would change the timing and the method for channeling supplementary funds to help disadvantaged students.
The Senate plan would boost total revenue allocated to the program by $471 million, but it would delay implementation for one year and would focus distribution of the money on schools, not districts, with large numbers of needy youth.
Call Jim Sanders, Bee Capitol Bureau, (916) 326-5538. Follow him on Twitter @jwsanders55.