California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - These firms have invested heavily in building out data centers and on extraordinary pay packages for their key employees. This spending, along with gains to investors, has turbo-charged state income tax receipts.
https://lao.ca.gov/Publications/Report/5104

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

Feb 20, 2026 - Given the recent forecasting differences between our office and the administration, there is a good chance the administration’s revenue upgrade at May Revision will be larger than our current estimate.
https://lao.ca.gov/Publications/Report/5133

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: Overview of the Governor's Budget

Jan 12, 2026 - There are several other differences between our November estimates of the deficit and the administration ’s current forecast. Together, these differences offset some of the budget improvement generated by a higher revenue estimate.
https://lao.ca.gov/Publications/Report/5101