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: How to Use One-Time Revenue Improvements

Feb 20, 2026 - Any additional resources that materialize at that time should be viewed as a one-time windfall. Despite Revenue Strength, Budget Relies on Reserves and Borrowing. This revenue upgrade comes in addition to already strong revenue growth forecasted in the Governor ’s budget.
https://lao.ca.gov/Publications/Report/5133

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

Jan 12, 2026 - We view this as roughly balanced —that is, neither a clear surplus nor a clear deficit. That said, it is notable that the budget is in a neutral position even though the administration ’s revenue estimate reflects growth and is up significantly relative to the budget act.
https://lao.ca.gov/Publications/Report/5101