"The voters do not want us to burst out of the gate to raise more taxes," said Senate President Pro Tem Darrell Steinberg, D-Sacramento, who was re-elected by senators to that leadership post Monday.
But he added that "there is an equally compelling danger. It is the danger in being so cautious, so worried about creating controversy that we fail to take advantage of unprecedented opportunities. Power is, by definition, fleeting. Misuse it and you'll lose it. Fail to use it, and it withers away," he said.
Democrats won two-thirds majorities in the Assembly and Senate in last month's election for the first time in 130 years and will be working with a governor of the same political party. The supermajorities will allow them to raise taxes if they choose and to unilaterally put constitutional amendments before voters.
In quick succession, Steinberg backed proposals by two Senate Democrats to introduce constitutional amendments that would lower the vote threshold to raise taxes for school districts and some other local governments from the current two-thirds to 55 percent. The proposals by Mark Leno of San Francisco and Lois Wolk of Davis would tinker with Proposition 13, the landmark 1978 property tax initiative that increased the number of votes needed to pass tax increases.
Steinberg said Democrats are now free to rewrite an $11 billion water bond set to go before voters in 2014, rearranging its priorities and lowering the borrowing by at least $1 billion. Republicans had insisted on including the possibility of building new dams when the bipartisan package was approved by lawmakers in 2009, while Democrats generally favored alternatives such as cleaning up contaminated groundwater and increasing conservation efforts.
Steinberg and Assembly Speaker John Perez, D-Los Angeles, who was also re-elected to that post Monday, said the new legislative session marks a turning point as the state recovers from the housing and economic collapse of 2008.
The state's independent legislative analyst has said the state could even see a budget surplus next year, and lawmakers will have an additional $6 billion a year after voters approved Gov. Jerry Brown's November initiative raising the state sales tax and income taxes on the wealthy.
Perez said it is time to restore California as a land of opportunity.
"And for the middle class Californians who have weathered a very difficult period in our history, we must deliver," he said. "The next generation of Californians will have their future determined, in no small part, by the actions we take over the next few years."
Perez signaled his willingness to work with Republicans, which Assemblyman Eric Linder, a newly elected Republican from Corona, applauded.
"This might provide a lot of opportunity for us," Linder said. "We can stay united. We can actually look for really good solutions to the problem and we have our place. I think it's an important one."
Sen. Bob Huff, R-Diamond Bar, who will remain as minority leader, noted that the tax increases voters approved with Proposition 30 are temporary, and the state could set itself up for future problems if Democrats spend the money too quickly.
"We will be setting the stage for our own fiscal cliff," Huff said. "... Now is not the time to go on a spending spree."
Steinberg proposed splitting new revenue in roughly equal portions to retire debt, build a rainy day fund and restore cuts to social and education programs.
And he said Democrats should ask voters in 2014 to consider changing an initiative process that critics say has been hijacked by wealthy individuals or special interests.
Monday's events were mostly ceremonial before the Legislature adjourned for the holidays.
Nearly half the 80 Assembly members are new to the Legislature. In the three races that officials consider too close to be called, the current front-runners were sworn in, including in Assembly District 36, which spans parts of Kern, Los Angeles and San Bernardino counties. Democrat Steve Fox was sworn in Monday, but Republican Ron Smith has said he will seek a recount.
Perez said the oath of office would be rescinded if the results were overturned by the final vote tally.
For the first time, new lawmakers will be able to serve 12 years in either the Assembly or the Senate, or a combination of both. Voters approved that change from previous term limits, which limited legislators to eight years in the Senate and six in the Assembly.
Lawmakers, along with California's statewide officeholders, also are working for less pay starting Monday. The California Citizens Compensation Commission voted in May to reduce their salaries by 5 percent.
Even with the reduction, California lawmakers remain the nation's highest paid with a base salary of $90,525 a year. Unlike lawmakers in some other states, they do not receive pensions.
The salaries for the Assembly and Senate leaders will be cut to $104,105.
"I think it kind of is punitive, but we have to do a better job of showing that we have the state's interests at heart and not our own interests, and when we do that I think they (commissioners) will respond accordingly," Huff said in response to the pay cut.
The governor's $174,000 salary will drop to about $165,000. Lt. Gov. Gavin Newsom's $130,000 salary will fall to about $124,000, and Attorney General Kamala Harris will be paid less than $144,000, down from about $151,000.
Commissioners justified the action by pointing to years of state budget deficits. The independent panel previously reduced salaries for California's statewide officeholders and its 120 legislators by 18 percent in 2009.
Associated Press writer Judy Lin contributed to this story.