California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - Despite our view that there is a strong possibility of a market downturn, however, our revenue forecast does not assume one will occur. Rather, we ’ve incorporated the elevated risk of a downturn into our estimates.
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 - About one-fifth of the state ’s transportation funding comes from the federal government, supported primarily by federal excise taxes on diesel and gasoline. The remainder of transportation funding comes from a variety of state revenue sources —primarily excise taxes on gasoline and diesel.
https://lao.ca.gov/Publications/Report/3511/6

The 2025-26 Budget: Undertaking Fiscal Oversight

Feb 24, 2025 - Although the Legislature solved sizeable deficits over the past few years, totaling over $80  billion, those solutions largely only impacted one-time and temporary programs supported by the one-time, post-pandemic revenue surge.
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 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - This year, for example, our outlook reflects our best estimates of the effects of H.R. 1: One Big Beautiful Bill Act on the state budget but does not make assumptions about future federal policy changes.
https://lao.ca.gov/Publications/Report/5091

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

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 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