SACRAMENTO, Calif. -- Gov. Jerry Brown declared Thursday that California's budget deficit has vanished thanks to new tax hikes and past spending cuts, marking the first time since the recession that state leaders haven't faced a deep fiscal chasm in January.

The Democratic governor proposed additional money for K-12 schools and higher education in his $97.7 billion general fund budget while restraining growth in most other programs.

"We have to live within the means we have, otherwise we get to that situation where we get red ink and then go back to cuts," Brown said. "So I want to avoid the boom and the bust, the borrow and the spend, where we make the promise and then we take it back."

Brown proposed an additional $250 million each for the University of California and California State University systems, with a catch: He wants to cap the number of state-subsidized classes students can take at 1.5 times the number typically needed to graduate. He believes students would earn degrees faster, opening slots and saving money.

The governor embraced a key part of President Barack Obama's health care overhaul by agreeing to extend Medi-Cal to as many as 1 million low-income residents previously ineligible for the program. That mostly includes adults living without children.

The federal government will pay nearly all health care costs for those individuals from 2014 through 2016. But Brown fears a reversal from Obama and Congress, as well as greater costs once California picks up more of the tab.

Brown unveiled the latest version of his K-12 funding overhaul, which eliminates most state-driven earmarks and directs more money to districts with impoverished students and English learners who are presumed to face greater challenges. The governor acknowledged that the proposal is controversial, especially in wealthier suburbs that stand to receive less funding than urban and rural districts.

But he considered it a matter of fairness.

"We know from back to Greek philosophy, Aristotle, that treating unequals equally is not justice," Brown said. "Growing up in Compton or in Richmond is not like it is to grow up in Los Gatos or Beverly Hills or Piedmont."

Brown said California is finally spending less money than it takes in, the first time since Gov. Gray Davis in 2001 that a governor has made such a bold claim.

"I would say it's probably too early to draw that conclusion," said Jeff Cummins, a political science professor at California State University, Fresno. "Historically, budget estimates have been wildly off. Saying 10 years after a structural deficit that we're out of the woods is premature."

In a show of bipartisanship rare for a January budget release, Republicans and Democrats said they generally supported Brown's budget, especially now that tax battles are in the rearview mirror.

Democrats now have enough votes to pass all of the budget on their own, including taxes, having claimed two-thirds control of both houses in November.

Legislative Democrats are eager to restore some of the health and welfare programs they agreed to cut under Brown and former Gov. Arnold Schwarzenegger when money was tighter. But they kept their demands to a minimum Thursday, knowing it was Brown's day to set the mood and that the governor has no immediate desire to spend beyond schools.

"This is a good starting point," said Assembly Speaker John A. Pérez, D-Los Angeles, who wants to prioritize lowering tuition rates at universities this year. "But it is that, it's a starting point."