California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - Unpacking this question calls for revisiting what is driving the state ’s current revenue boom. As we described in our November Fiscal Outlook , the recent stronger-than-expected revenue trends are almost entirely explained by the personal income tax (PIT), which has seen double digit growth this year.
https://lao.ca.gov/Publications/Report/5104

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

Jan 12, 2026 - This  higher revenue assumption substantially improves the budget condition relative to our forecast and is the main driving difference between our estimates of the deficit. Higher Spending Estimates Erode Some of the Budget Improvement.
https://lao.ca.gov/Publications/Report/5101

Cal Facts: 2016

Dec 5, 2016 - Roughly 85  percent of Californians drive to work alone or in a carpool, while about 5  percent of Californians use transit and about 4  percent walk or use a bicycle to reach their jobs. Roughly 1 in every 20 passenger vehicles registered in California is a hybrid, electric, or alternative fuel vehicle.
https://lao.ca.gov/Publications/Report/3511/6

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

The 2025-26 Budget: Undertaking Fiscal Oversight

Feb 24, 2025 - Identifying the effect of state programs on key outcomes of interest is often challenging because it usually requires in-depth research to determine whether state funding —or some other external factor —is driving the observed trends.
https://lao.ca.gov/Publications/Report/4983

The 2025-26 Budget: California's Fiscal Outlook

Nov 20, 2024 - Booming Stock Market Driving Income Growth. The recent run ‑up in the stock market, which appears tied to optimism surrounding artificial intelligence, is a primary driver of the rapid growth in pay to high ‑income workers.
https://lao.ca.gov/Publications/Report/4939

The 2018-19 May Revision: LAO Revenue Outlook

May 12, 2018 - Personal Income Tax (PIT) Healthy Growth in Wages and Salaries Drive PIT Growth. Our PIT outlook reflects anticipated tightening in labor markets, which puts upward pressure on wages. Accordingly, we estimate that taxable wages and salaries will increase by 7.5 percent in 2018 and 6.6 percent in 2019 before fading to 3.5 percent growth in 2021.
https://lao.ca.gov/Publications/Report/3830

The State Appropriations Limit

Apr 21, 2021 - The state ’s appropriations subject to the limit fell substantially during the dot ‑com bust in the early 2000s and again during the Great Recession due to the significant decline in state revenues during those downturns.
https://lao.ca.gov/Publications/Report/4416

The 2016-17 Budget: Initial Comments on the Governor’s May Revision

May 15, 2016 - New Budget Commitments Since January State Actions Drive Future Costs. Since the Governor released his budget in January 2016, the state has made several significant budget commitments. Together, these budgetary commitments represent substantial new ongoing costs for the state.
https://lao.ca.gov/Publications/Report/3460

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