The 2026-27 Budget: How to Use One-Time Revenue Improvements [Publication Details]

Feb 20, 2026 - Recent stock market performance continues to boost income tax collections. In our Fiscal Outlook, we strongly advised the Legislature to treat near-term strength in tax collections as temporary because we expect these gains to reverse. Further, the state faces significant structural deficits in the future.
https://lao.ca.gov/Publications/Detail/5133

The 2026-27 Budget: How to Use One-Time Revenue Improvements

Feb 20, 2026 - The 2026-27 Budget: How to Use One-Time Revenue Improvements The 2026-27 Budget How to Use One-Time Revenue Improvements Recent stock market performance continues to boost income tax collections. In our Fiscal Outlook , we strongly advised the Legislature to treat near-term strength in tax collections as temporary because we expect these gains to reverse.
https://lao.ca.gov/Publications/Report/5133

The 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - Instead, because a market downturn is only a risk but not a certainty, our forecast includes income tax collections that are somewhat weaker than suggested by cash trends, but still tens of billions of dollars above where they would be if stocks actually drop significantly.
https://lao.ca.gov/Publications/Report/5091

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

California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - While the Governor ’s budget describes the financial markets as a leading risk to the budget and assumes that stock market appreciation slows, it does not explicitly factor the risk of a market downturn into its revenue estimates.
https://lao.ca.gov/Publications/Report/5104

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

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

Jan 12, 2026 - Stock Market Poses Serious Risk to Revenues. Several historically reliable signs suggest the stock market is overheated and at high risk of reversing course into a downturn in the next year or so. Should a stock market downturn occur, income tax revenues would fall considerably.
https://lao.ca.gov/Publications/Report/5101

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

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

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