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Gov. Arnold Schwarzenegger answers a question about his revised $131 billion 2006-07 state budget

Working with revenues that he said increased “beyond all projections,” Gov. Arnold Schwarzenegger released a $131.1 billion 2006-2007 state budget on Friday, with the largest portion of money going to education.

Schwarzenegger announced he would use the unanticipated funds to pay off some of the state’s debt, put money on reserve, and spend $13.8 billion more than the state spent in the 2005-2006 fiscal year.

Overall, the budget grew by more than $15 billion, up from $115.7 billion in 2005-2006.

The relative health of the state budget has implications for University of California funding, and for the amount students will be required to pay in fees for the 2006-2007 academic year.

In January, Schwarzenegger proposed to buy out student fee increases for 2006-2007 so the cost of UC education could remain at the current level for at least another year. That would make next year the first time since the 2002-2003 academic year that students would not experience a hike in fees.

Over the past several years, the UC has experienced sharp funding cuts due to the state’s struggling economy, and student fees have been raised accordingly.

“California is experiencing a pretty healthy increase in revenues,” said Steven Frates, a senior fellow at Claremont McKenna College’s Rose Institute of State and Local Government. “My sense is that as long as revenues continue increasing the way they are ... there would be less pressure to increase student fees.”

With more than $55 million going to education – compared to about $50 million last year – Schwarzenegger said “education is now fully funded. ... This is a cause of celebration.”

But some have said they believe there is more behind Schwarzenegger’s budget decisions than the “passion” he said he has for education. This November, Schwarzenegger will run for re-election against either State Treasurer Phil Angelides or State Controller Steve Westly, who are competing in the Democratic primary election in June.

State Assembly Speaker Fabien Nuñez, D-Los Angeles, referred to “the governor’s election-year budget” in a statement Friday.

In another statement, Angelides said Schwarzenegger’s budget has an election-year calculation to quiet his enemies.

“He’s just trying to save his hide,” Angelides said. “He’s really not trying to fight for those young people.”

Angelides said the governor’s plan does not go far enough to pay down the state’s debt and lower student fees.

The surge of income from taxes comes in part from the tax cuts President Bush made in 2003, Frates said.

“As economic activity picked up from the so-called Bush tax cuts in 2003, that particularly benefits California because more people are making more money and paying more state taxes,” he said.

But there are also “a few dark clouds” in the budget, which cast a shadow on an otherwise optimistic year overall, said Steve Maviglio, a spokesman for Nuñez.

He said the lawsuits California is currently facing, which could cost the state up to $2 billion, are cause for concern.

Another concern with the state budget is the amount it allocated to fund children’s health care, which is $24 million above the amount set out in the January proposal.

But even with this increase, Sen. Wesley Chesbro, D-Arcata, said Schwarzenegger has not given enough to fulfill his pledge to provide coverage for the estimated 800,000 without health care.

With reports from Bruin wire services.