Gov. Jerry Brown will lay out his proposed budget in a speech on Friday (Rich Pedroncelli/AP)

The debate over government spending doesn’t revolve around what budgets to cut; it revolves around how to spend the surplus money the state didn’t expect to take in. The politicians aren’t unpopular; polls show most voters like their leaders. There is little gridlock, considering that one party holds total control.

Fantasyland? Nope. It’s just California.

Heading into an election year with high approval ratings and little in the way of political opposition, Gov. Jerry Brown (D) and legislative Democrats still have thorny issues to address.

A federal court has ordered the state to issue a long-term plan to relieve chronic prison overcrowding, and the legislature is likely to spend much of its year on criminal justice issues. Farmers are reeling from years of drought, making a water bond that could cost up to $11 billion a top priority for lawmakers in both the Assembly and the Senate.

Then there’s the budget. Higher tax revenue means the state will have $2.2 billion more than expected at the end of the current fiscal year, money that Brown and legislative leaders want to use to pay down debt and build up the state’s rainy day fund. The Los Angeles Times’s Melanie Mason and Patrick McGreevey explain:

Officials have predicted a $2.2-billion surplus when the current fiscal year ends in June. The state’s improved financial footing could set off new battles over whether to restore social services slashed during the recession or hold off on any significantly higher spending.

Early budget proposals from legislative leaders have attempted to strike a balance. Gov. Jerry Brown will release his budget plan Friday.

“Even with the improved revenue, there is a lot of work to do to keep California’s fiscal house in order,” said Assembly Speaker John A. Pérez (D-Los Angeles). He laid out dual priorities of “maintaining stability and expanding opportunity.”

Senate President Pro Tem Darrell Steinberg (D-Sacramento) said in an interview he wants to use a third of any surplus for a rainy day fund, a third to pay down debt and the rest to replenish social service programs cut in recent years, among other purposes.

Both leaders urge that pre-kindergarten programs be made available to all 4-year-olds in California. Currently, a quarter of 4-year-olds are eligible for transitional kindergarten funded by the state.

Brown will push a move by Pérez to put a rainy-day fund initiative on the ballot next year, sources told the L.A. Times. Money from capital gains taxes would be directed to the savings fund, and the proposal is likely to be included in Brown’s budget proposal, the sources said.

All those questions will play out under a cloud of politics: Pérez is running for state Controller. Steinberg is also term-limited out of his post. The races to replace the two leaders will be competitive; at least two top Senate Democrats are running to replace Steinberg, while several are jockeying to supplant Pérez in the Assembly.