Gov. Arnold Schwarzenegger released a revised $101 billion budget on Friday that spends $7.5 billion in additional revenues on education, on early debt repayments and to boost reserves.

An obviously pleased Schwarzenegger said that $4.8 billion more had come into state coffers for the current fiscal year than anticipated in January and that state revenue projections expect another $2.7 billion in revenues for the 2006-07 fiscal year beginning July 1.

But he injected a note of caution, saying that it appears that a sizable portion of the extra revenues were one-time capital gains taxes that cannot be counted on in future years.

“I’m pleased to announce that we’ve increased education funding $8.1 billion in just two years,” Schwarzenegger said at a press conference unveiling his budget.

Schwarzenegger earlier in the week had indicated he was prepared to spend $3 billion of the windfall to repay money borrowed from the education budget in 2004 to help plug a $16 billion budget deficit.

However, the spending plan included none of the tax breaks sought by the business community, including restoring the manufacturers’ tax credit, though no major fee hikes were announced, either.

Even so, the California Manufacturers and Technology Association, in response to the budget, said the governor had taken an important step towards strengthening the manufacturing sector by funding career technical education and by fully funding the state’s Employment Training Fund.

Schwarzenegger also said his budget includes provisions to pay $1.6 billion in outstanding bonds ahead of schedule, including $1 billion in economic recovery bonds passed two years ago as part of the state’s financial workout plan. Prepaying these bonds would free up more money in future years for other pressing needs like education and health care, he said.

Another $1.6 billion would go to the state’s reserve fund, bringing the total reserves to $2 billion, or about 2 percent of the overall general fund budget.

He also announced the budget was setting aside $400 million for emergency and health care funding in case a bird flu pandemic were to hit California.

Schwarzenegger said that despite all the additional revenues, his revised budget contains no tax cuts. “We are far away from reducing any taxes,” he said. “We still have to pay off a lot of debt. We still owe a lot.”

He also said he was resisting entreaties to spend more on programs like health care for children because committing one-time revenues to ongoing programs was what had led to the state’s budget crisis in 2002.

In response to Schwarzenegger’s budget, Democrat leaders in the Legislature said they were generally pleased with the budget, saying that Schwarzenegger had learned his lesson from the special election and was embracing more mainstream priorities.

But Assembly Majority Leader Dario Frommer, D-Los Angeles, who called Schwarzenegger’s budget an example of “Extreme Makeover, Political Edition,” said there were still some differences. Chief among them: diverting gas tax revenues to the general fund instead of keeping them in the transportation budget and fully funding a commitment to provide health care coverage for all children.

State Sen. Wes Chesbro, D-Santa Rosa, who chairs the joint legislative budget committee, said he was optimistic that a budget could be passed by the June 30 deadline this year, provided that Schwarzenegger could bring along enough Republican votes to ensure a two-thirds majority.