California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - After the dot-com bust and the Great Recession, it took four and five years, respectively, for revenues to recover. Incorporating revenue risk into the budget now, therefore, reflects prudence, not pessimism.
https://lao.ca.gov/Publications/Report/5104

Building Reserves to Prepare for a Recession

Mar 7, 2018 - In a 2003 decision in Paterno v. California , a state appellate court found the state was responsible for a levee failure along the Yuba River in 1986. The state eventually paid a $ 464  m illion settlement to the nearly 3, 000 p laintiffs.
https://lao.ca.gov/Publications/Report/3769

The 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - For California, the dot ‑com era —when stocks rose and then fell precipitously in response to widespread adoption of the internet —offers the most salient example. The internet has proven to be a transformative technology and, yet, the stock market ’s initial reaction was clearly overly exuberant.
https://lao.ca.gov/Publications/Report/5091

Whether or Not to Tap Reserves to Solve Estimated Budget Problem Emerges as Key Fiscal Decision Facing California’s Legislature

Apr 19, 2023 - Other downturns, such as the 2001 so-called dot-com recession, had severe fiscal implications while inflicting somewhat milder economic damage. The 2008 Great Recession had brutal effects on both the state ’s economy and budget.
https://lao.ca.gov/Publications/Report/4762

The 2019-20 May Revision: LAO Revenue Outlook

May 12, 2019 - Supreme Court ruling in South Dakota v. Wayfair, Inc. , which gives states new opportunities to improve compliance with the use tax on Internet sales. .  .  .  But Softened by Economic Factors. Our SUT projections are based, in part, on several parts of our economic outlook —particularly our projections for California personal income.
https://lao.ca.gov/Publications/Report/4037

The 2017-18 Budget: California Spending Plan

Oct 18, 2017 - The budget includes $2  billion from the General Fund for inmate medical care to comply with the federal court in the Plata v. Brown case, an increase of $46  million, or 2  percent, above the revised 2016 ‑17 level of spending.
https://lao.ca.gov/Publications/Report/3694/11

COVID-19 and California’s Evolving Fiscal Outlook

Mar 18, 2020 - Aided by monetary and (federal) fiscal stimulus, broad-based demand would rebound, contributing to a V ‑shaped recovery, in which activity recovers nearly as quickly as it fell. In a more pessimistic scenario, economic activity would remain depressed for longer, compounded by dislocated supply chains and reduced lending caused by elevated risk aversion in credit markets.
https://lao.ca.gov/Publications/Report/4203

The 2018-19 May Revision: LAO Economic Outlook

May 12, 2018 - The typical PE ratio since 1990 is 21 (19 if the dot-com bubble of the late 1990s and early 2000s is excluded). Similar to the price-to-earnings ratio, the home price-to-rent ratio is used to gauge if home prices are in line with underlying demand for housing.
https://lao.ca.gov/Publications/Report/3829

Rethinking California's Reserve Policy

Apr 10, 2025 - In March of 2004, on the heels of the dot ‑com bust, voters passed Proposition  58, which created the Budget Stabilization Account (BSA). In the 2006 ‑07 budget, the Legislature deposited $472  million into the BSA and in 2007 ‑08 deposited $1.5  billion.
https://lao.ca.gov/Publications/Report/5028

The 2019-20 Budget: California's Fiscal Outlook

Nov 14, 2018 - This largely has been due to ( 1)  r ising caseload and costs per beneficiary, ( 2)  s cheduled reductions in federal funding (as the federal share of costs for Medi ‑Cal ’s optional expansion population has declined), and ( 3)  v arious technical adjustments.
https://lao.ca.gov/Publications/Report/3896