SACRAMENTO (KCBS)—The California State Legislature returned to work on Tuesday to examine Gov. Jerry Brown’s proposed budget amid a widening divide over how much money the state can spend.

The Legislative Analysts Office predicts state revenues will top $100 billion but Gov. Brown expects it to be closer to $97 billion. The possibility of budget surplus has lawmakers already talking about new spending.

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“We’ve got a proposal on how allocate the education dollars and some key investments, including a $100 million to the courts,” Budget Committee Chairman Bob Blumenfield said.

Blumenfield stressed the need for prudence but added that targeted spending increases are being considered.

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Meanwhile, other lawmakers want to increase spending on mental health programs, restoring dental coverage for adults under MediCal.

Last week, however, Brown spoke to a group of business leaders and warned about the dangers of increased spending.

“We can’t be spending money we don’t have, and most of that money is absorbed by the schools. And what isn’t absorbed by the schools, over the next few years, will be absorbed by the Affordable Care Act,” Brown said.

Brown underscored the need to stay on present course and made the point that budget is not really balanced until the dollars actually arrive.

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