California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - Second, the Governor proposed suspending a $2.8  billion true-up deposit to the state ’s reserve that otherwise would be required. This proposal helps balance the budget but runs counter to the basic fiscal logic that stronger-than-expected revenues should be used to build reserves.
https://lao.ca.gov/Publications/Report/5104

Building Reserves to Prepare for a Recession

Mar 7, 2018 - To put this in more concrete but very rough terms, a moderate recession, like the dot ‑com bust, could lead to a $ 40  b illion budget problem. A more mild recession might result in a $ 20  b illion budget problem.
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

^[PDF] Building Reserves to Prepare for a Recession

To put this in more concrete but very rough terms, a moderate recession, like the dot-com bust, could lead to a $40 billion budget problem. A more mild recession might result in a $20 billion budget problem.
https://lao.ca.gov/reports/2018/3769/prepare-for-recession-030718.pdf

^[PDF] Oversight of Budget Reserves

Constitutional deposits to (and withdrawals from) the BSA are governed by the rules of Proposition 2 (2014). The balance in the BSA reached around 12 percent of General Fund revenues in 2022-23, but a withdrawal was used to cover part of this year’s budget problem.
https://lao.ca.gov/handouts/state_admin/2024/Budget-Reserves-Overview-080624.pdf

The 2023-24 Budget: Overview of the Governor's Budget

Jan 13, 2023 - This increases the size of the budget  problem. $800   Million in Other Differences. Across the rest of the budget, our estimates of baseline spending —for example, for caseload growth, federal reimbursements, and statutory cost increases —and constitutional requirements —for example, for infrastructure and deposits into reserves —differ , on net, by $800  million.
https://lao.ca.gov/Publications/Report/4662

The 2023-24 Budget: Multiyear Assessment

Feb 15, 2023 - Three of those —the recession in the early 1990s, the dot ‑com bust in the early 2000s, and the Great Recession —resulted in large revenue shortfalls and ensuing multiyear deficits, even for some years after each recession ended.
https://lao.ca.gov/Publications/Report/4687

The 2024-25 Budget: Department of Justice

Feb 9, 2024 - The 2023-24 budget included budget provisional language allowing the Department of Finance (DOF) to authorize an up to $400  million no-interest loan from the LDF to the General Fund to help address the state ’s budget problem.
https://lao.ca.gov/Publications/Report/4831

The 2026-27 Budget: California's Fiscal Outlook [Publication Details]

Nov 19, 2025 - Each year, our office publishes the Fiscal Outlook in anticipation of the upcoming budget season. This report gives the Legislature our independent estimates and analysis of the state’s General Fund budget condition with the goal of helping lawmakers prepare for the 2026-27 budget process.
https://lao.ca.gov/Publications/Detail/5091

The 2019-20 May Revision: Overview of the May Revision Proposition 98 Package

May 13, 2019 - The deposit also complements the state ’s other efforts to improve its fiscal footing, such as its deposits into reserve accounts that benefit other parts of the state budget. Mix of One-Time and Ongoing Proposals Moves in the Right Direction.
https://lao.ca.gov/Publications/Report/4044