California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - Whereas California’s labor market has stagnated over the last two years, the S&P 500 stock index has appreciated roughly 50 percent over the same period. And most of this increase has come from skyrocketing share prices among a handful of firms associated with innovations in Artificial Intelligence (AI).
https://lao.ca.gov/Publications/Report/5104

Building Reserves to Prepare for a Recession

Mar 7, 2018 - Budget Stabilization Account Proposition   58 Governed BSA From 2004 t o 2014. Until 2014, the BSA was governed by Proposition  58. Passed by voters in 2004, Proposition   58 r equired the state to make an annual transfer into the BSA.
https://lao.ca.gov/Publications/Report/3769

Evolution of the Balance of the Budget Stabilization Account

Nov 14, 2018 - As Figure  1 shows, this means that $500  million of the initial $2  billion deposit is “constitutionally required ” (under the true-up provisions) and the remainder is optional. Under our recent Fiscal Outlook revenue estimates for 2017 ‑18 and 2018 ‑19, the initial $2.6  billion optional deposit made in 2018 ‑19 would now be mostly constitutionally required, with only $320  million still considered optional.
https://lao.ca.gov/Publications/Report/3900

The 2024-25 Budget: Overview of the Governor's Budget

Jan 13, 2024 - We Estimate the Administration Solved a Larger Budget Problem —$58   Billion. While the Governor cited a budget problem of $38  billion, we estimate the administration solved a budget problem of $58  billion.
https://lao.ca.gov/Publications/Report/4825

The 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - The stock market (S &P 500) has risen 50  percent in the last two years. Most of these gains come from the meteoric rise in the value of a handful of tech companies that investors believe will be major beneficiaries of recent advances in AI.
https://lao.ca.gov/Publications/Report/5091

The 2018-19 May Revision: LAO Economic Outlook

May 12, 2018 - As of early May, the PE ratio of the Standard and Poor ’s 500 index was 24.5. 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

The 2024-25 Budget: Deficit Update

Feb 20, 2024 - The 2024-25 Budget: Deficit Update Deficit Update Under LAO Revenue Update, Budget Problem Grows by $15  Billion The state already faces a significant deficit this year — we estimate it totaled $58 billion under the administration’s revenue forecast at the time the Governor’s budget was proposed in January.
https://lao.ca.gov/Publications/Report/4850

The 2018-19 Budget: California Spending Plan (Final Version)

Oct 2, 2018 - Poverty Increases cash assistance grants beginning in April 2019 ($90  million in 2018 ‑19, $360  million ongoing). Provides $220  million (one time) to reverse the CalFresh cash out policy for SSI/SSP.
https://lao.ca.gov/Publications/Report/3870/1

The 2018-19 Budget: California Spending Plan (Final Version)

Oct 2, 2018 - The budget dedicates $ 90  m illion in 2018 ‑ 19 t o increase these grants beginning in April 2019, but the full ‑year cost of these increases is $ 360  m illion. The budget also dedicates about $ 348  m illion to the universities on an ongoing basis and $ 139  m illion to increase salaries for correctional officers.
https://lao.ca.gov/Publications/Report/3870

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