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 - 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 2017-18 Budget: California Spending Plan

Oct 18, 2017 - The AG was unable to hire all anticipated additional staff in 2016 ‑17, resulting in $4.5  million carried forward to 2017 ‑18. The 2017 ‑18 budget package also requires the AG to report quarterly on the status of its backlog of teacher misconduct reviews.
https://lao.ca.gov/Publications/Report/3694/3

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 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

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

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 2016-17 Budget: California Spending Plan

Oct 5, 2016 - Specifically, the budget assumed CTC would face higher ongoing costs for the Office of the Attorney General (AG) to review serious disciplinary cases. The AG was unable to hire all anticipated additional staff in 2015 –16 , resulting in $2.4  million in unspent current –year funds.
https://lao.ca.gov/Publications/Report/3487/3

The 2024-25 Budget: California's Fiscal Outlook

Dec 7, 2023 - The Governor may declare a budget emergency in two cases: (1)  if  estimated resources in the current or upcoming fiscal year are insufficient to keep spending at the level of the highest of the prior three budgets, adjusted for inflation and population (a “fiscal budget emergency ”), or (2)  in response to a natural or man ‑made disaster.
https://lao.ca.gov/Publications/Report/4819

Evolution of the Balance of the Budget Stabilization Account

Nov 14, 2018 - The Governor may only call a budget emergency if one of two conditions holds: (1)  estimated resources in the current or upcoming fiscal year are insufficient to keep spending at the level of the highest of the prior three budgets, adjusted for inflation and population (a “fiscal budget emergency ”), or (2)  in response to a natural or man-made disaster.
https://lao.ca.gov/Publications/Report/3900