California Governor Jerry Brown budget will cut spending by $12.5 billion, including as much as a 10 percent pay reduction for most state employees, aides said.

The plan, which Brown is to unveil today, will also raise $12 billion by retaining tax increases due to expire and making other modifications. Some of the revenue will go to cities and counties as part of Brown’s plan to transfer spending authority from the state to local governments.

The largest U.S. state by population faces a $25.4 billion budget gap over the next 18 months, Brown said in a statement. The 72-year-old Democrat, who took the oath of office last week, has vowed to reach a budget agreement with state Legislators over the next 60 days.

“These cuts will be painful, requiring sacrifice from every sector of the state, but we have no choice,” Brown said in the statement.

His plan will chop an amount equal to 10 percent of the current year’s $125.3 billion in spending. Cuts include $1.7 billion from Medi-Cal, the state’s version of the Medicaid program for the poor; $1.5 billion from CalWorks, a welfare-to- work program; and a combined $1 billion from the University of California and the California State University systems, which together serve 663,000 students.

Additional cuts will be made to prisons and the courts. Spending on kindergarten through 12th-grade education will be spared, Brown said.

“Schools have borne the brunt of spending reductions in recent years, so this budget maintains funding at the same level as the current year,” he said.

Voters will be asked to extend increases in sales and income taxes as well as vehicle license fees in a special election in June, Brown said.

His proposal involves total state spending of $127.4 billion for the 2011-12 fiscal year which begins July 1. Of that, $84.6 billion would come from the state’s general fund.