COVID-19 and California’s Evolving Fiscal Outlook [Publication Details]

Mar 18, 2020 - In this installment of Fiscal Perspectives, Legislative Analyst Gabriel Petek offers some initial observations on the recent volatility in financial markets, palpably sharp reduction in economic activity, and the state’s fiscal position at the outset of the COVID-19 outbreak.
https://lao.ca.gov/Publications/Detail/4203

COVID-19 and California’s Evolving Fiscal Outlook

Mar 18, 2020 - Volatile Financial Markets Indicate Lower Capital Gains-Related Tax Revenue Taxes on capital gains are a significant source of state revenue. Even in “normal ” times, capital gains income is difficult to forecast because it correlates with stock market performance.
https://lao.ca.gov/Publications/Report/4203

The 2025-26 Budget: California's Fiscal Outlook

Nov 20, 2024 - Still, some cautionary observations are warranted. Current stock prices relative to companies ’ past earnings (a common measure of how “expensive ” stocks are) are at levels rivaled only by the transitory booms of 1999 and 2021.
https://lao.ca.gov/Publications/Report/4939

Amid Good Fiscal Times, Planning for the Future Is Crucial

May 21, 2019 - Whereas in a typical year, California-based companies make initial public offerings (IPOs) worth about $30  billion of market capitalization, 2019 has already seen IPOs with $150  billion in market capitalization.
https://lao.ca.gov/Publications/Report/4051

The Quiet Transformation in California’s Cash Management

Aug 29, 2019 - This important function warrants exercising a careful approach to using the cash balances for other purposes when the economy is still expanding. Subscribe | California State Legislature | Online Voter Registration | Privacy Policy | Accessibility Legislative Analyst's Office | The California Legislature's Nonpartisan Fiscal and Policy Advisor 925 L Street, Suite 1000 Sacramento, CA 95814 | (916) 445-4656
https://lao.ca.gov/Publications/Report/4091

Tempered Expectations

Dec 9, 2019 - Tempered Expectations Tweet Gabriel PetekLegislative Analyst Recently, the Legislative Analyst ’s Office released its report, The 2020-21 Budget: California’s Fiscal Outlook amid data indicating that the economic expansion, now in its 11th year, is still intact.
https://lao.ca.gov/Publications/Report/4122

Rethinking California's Reserve Policy

Apr 10, 2025 - Asset market downturns, like stock market drops or real estate slumps, can also reduce capital gains tax revenue and other investment ‑related income, lowering state revenue. Conversely, revenues can grow quickly in response to economic expansions or run ups in the stock market.
https://lao.ca.gov/Publications/Report/5028

Cap-and-Trade Extension: Issues for Legislative Oversight

Dec 12, 2017 - It is sometimes called a soft price ceiling because market prices could still exceed the ceiling after all of the APCR allowances are purchased. Since the overall number of allowances available is still limited, there is still a fixed limit on overall emissions in the capped sector.
https://lao.ca.gov/Publications/Report/3719

The 2018-19 May Revision: LAO Multiyear State Budget Outlook

May 17, 2018 - On the other hand, better conditions in the economy and asset markets also are possible. For example, our office assumes growth in the stock market declines in 2019, but higher stock market growth would increase revenues (offset partially by higher formula-driven spending requirements).
https://lao.ca.gov/Publications/Report/3843

Despite Fiscal Forecasting Uncertainties, Multiyear Budget Planning Essential

May 27, 2021 - Under this approach, we also still recommend building larger discretionary reserves  by restoring the budget tools that were deployed in last year ’s budget. Note that under either revenue assumption, we recommend providing for larger discretionary reserves.
https://lao.ca.gov/Publications/Report/4443