How Have Past Stock Market Downturns Affected Income Tax Revenue? [EconTax Blog]

Mar 9, 2026 - The dot-com example below illustrates this pattern. In practice, this means the state could see continued but weakened revenue growth for some time after a correction before the outlook turns clearly negative.
https://lao.ca.gov/LAOEconTax/Article/Detail/852

How Have Past Stock Market Downturns Affected Income Tax Revenue? [EconTax Blog]

Mar 9, 2026 - The dot-com example below illustrates this pattern. In practice, this means the state could see continued but weakened revenue growth for some time after a correction before the outlook turns clearly negative.
https://lao.ca.gov/LAOEconTax/article/Detail/852

California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - As we described in our November Fiscal Outlook , the recent stronger-than-expected revenue trends are almost entirely explained by the personal income tax (PIT), which has seen double digit growth this year.
https://lao.ca.gov/Publications/Report/5104

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

Jan 12, 2026 - The administration ’s assessment that recent gains will continue differs from our Fiscal Outlook , which, in contrast, reflects an assessment that recent gains are unlikely to be sustainable as they are tied to an overheated stock market.
https://lao.ca.gov/Publications/Report/5101

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

Feb 20, 2026 - 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/Report/5133

The 2026-27 Budget: Proposition 98 Guarantee and K-12 Spending Plan

Feb 4, 2026 - Another option is to provide advance payments to districts toward their 2027 ‑28 funding allotments, consistent with an approach we outlined in our November 2025 report, The 2026‑27 Budget: Fiscal Outlook for Schools and Community Colleges .
https://lao.ca.gov/Publications/Report/5110

The 2026-27 Budget: California Student Aid Commission

Feb 17, 2026 - Given the state ’s fiscal outlook, the Legislature likely will need to consider not only this MCS proposal but many other budget ‑balancing proposals over the next couple of years. Given the MCS program has significant overlap with the Cal Grant program, is less targeted to lower ‑income students, and is more complex to convey and administer than other financial aid programs, reducing MCS award coverage could be among the least disruptive choices the Legislature  faces.
https://lao.ca.gov/Publications/Report/5127

The 2026-27 Budget: Framework for Approaching the Natural Resources, Environmental Protection, and Agriculture Budget

Feb 10, 2026 - As a result, avoiding approval of policies and proposals that would increase out ‑year spending until the state ’s fiscal outlook improves would be prudent. Below are two examples for the Legislature to  consider.
https://lao.ca.gov/Publications/Report/5116

Oversight of certain public benefit artificial intelligence (AI) companies. [Ballot]

Jan 20, 2026 - The measure would have the following major fiscal effects: Increased state costs that would likely be in the tens of millions of dollars annually to establish and operate a new regulatory commission overseeing certain public benefit AI com panies.
https://lao.ca.gov/BallotAnalysis/Initiative/2025-033

The 2026-27 Budget: University of California

Feb 26, 2026 - Given this context, if the Legislature wishes to continue providing base increases to UC despite the challenging budget outlook, it could consider approving smaller increases that are more closely aligned with current inflationary benchmarks —such as the 2.41  percent base increase proposed for community colleges.
https://lao.ca.gov/Publications/Report/5143