Legislative Analyst Mac Taylor says nearly all of the extra money would go to schools under California's Proposition 98 - so he says Brown is wise to not call for new spending.  He also says the state should put money in a budget reserve and address its unfunded pension liabilities.

"We need to be disciplined," Taylor says.  "We've dug out of a big, deep hole, and the last thing we want to do is start another one."

But several Democrats and progressive groups immediately called for some of the deepest health care and social service cuts from recent years to be restored.  Assembly Speaker John Pérez says it's "too soon to know" if he'll support using the extra money to increase spending. "We look at all of the projections and come to whatever the best conclusion is about what they tell us for the future."

Pérez says he'll be cautious - and focus on paying down debt and building a reserve.

Read the LAO's report here.