California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - And most of this increase has come from skyrocketing share prices among a handful of firms associated with innovations in Artificial Intelligence (AI). These firms have invested heavily in building out data centers and on extraordinary pay packages for their key employees.
https://lao.ca.gov/Publications/Report/5104

The 2026-27 Budget: Overview of the Governor's Budget

Jan 12, 2026 - Under two voter initiatives, the State Constitution requires the state to set aside a share of revenues for schools and community colleges (Proposition  98, 1988) and debt payments and reserve deposits (Proposition  2, 2014).
https://lao.ca.gov/Publications/Report/5101

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 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

Building Reserves to Prepare for a Recession

Mar 7, 2018 - By most measures, the recession of the early 1990s was more severe than the dot ‑com bust in the early 2000s. For example, unemployment in California reached 9. 7  p ercent in mid ‑ to late ‑1992, but peaked at 6. 9  p ercent after the dot ‑com bust.
https://lao.ca.gov/Publications/Report/3769

The 2025-26 Budget: Initial Comments on the Governor's May Revision

May 17, 2025 - While  these cost increases affect all enrollee groups, the administration attributes a significant share of the growth to higher costs associated with individuals lacking satisfactory immigration status.
https://lao.ca.gov/Publications/Report/5044

Managing California’s Cash

Sep 3, 2019 - After a period of relative calm in the mid ‑ and late ‑1990s, California faced another series of years with acute budget problems following the dot ‑com bust and ensuing recession. Although the dot ‑com bust was relatively mild in economic terms, it hit the California budget —which is particularly reliant on the Bay Area ’s technology sector —especially hard.
https://lao.ca.gov/Publications/Report/4092

The 2019-20 Budget: California Spending Plan—Debt Liabilities

Oct 17, 2019 - Special Fund Loans Throughout the 2000s, particularly in response to the dot-com bust and Great Recession, the state loaned amounts to the General Fund from other state accounts, particularly special funds to address General Fund budget problems.
https://lao.ca.gov/Publications/Report/4106

The 2020-21 Budget: Overview of the California Spending Plan (Final Version)

Oct 5, 2020 - As a condition of receiving the funding, counties must show that they are in com pliance with state and federal public health requirements. Budget Provides $600   Million for Project Homekey and Related Services.
https://lao.ca.gov/Publications/Report/4263

The 2025-26 Budget: Multiyear Budget Outlook

May 24, 2025 - While the majority of those deficits have been solved using spending reductions, a non-negligible share of the solutions have relied on budgetary borrowing. Some of this borrowing is similar to the measures used during the Great Recession —collectively previously referred to as the state ’s “wall of debt, ” which was defined as nonroutine borrowing mechanisms enacted to address persistent deficits.
https://lao.ca.gov/Publications/Report/5052