California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - Second, the Governor proposed suspending a $2.8  billion true-up deposit to the state ’s reserve that otherwise would be required. This proposal helps balance the budget but runs counter to the basic fiscal logic that stronger-than-expected revenues should be used to build reserves.
https://lao.ca.gov/Publications/Report/5104

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

Mar 9, 2026 - By most measures, the global financial crisis was more severe than the dot-com crash. The state 's unemployment rate, for example, peaked at 7 percent following the dot-com crash but reached nearly double that during the financial crisis and remained elevated for much longer.
https://lao.ca.gov/LAOEconTax/Article/Detail/852

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

Mar 9, 2026 - By most measures, the global financial crisis was more severe than the dot-com crash. The state 's unemployment rate, for example, peaked at 7 percent following the dot-com crash but reached nearly double that during the financial crisis and remained elevated for much longer.
https://lao.ca.gov/LAOEconTax/article/Detail/852

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

Jan 12, 2026 - In our November Fiscal Outlook report, we estimated that the state faced an $18  billion budget problem. This budget problem was larger than the one anticipated by the administration in June, despite strong trends in income tax collections in the intervening months.
https://lao.ca.gov/Publications/Report/5101

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

Feb 4, 2026 - The proposal effectively shifts that cost from this year to future budgets —helping address the current budget problem on a one ‑time basis, but adding to the large budget deficits the state is projecting over the next several years.
https://lao.ca.gov/Publications/Report/5110

The 2026-27 Budget: Office of Emergency Services Next Generation 911 System

Feb 27, 2026 - Funding for the state ’s 911 system comes from a monthly surcharge on telephone customers deposited in the State Emergency Telephone Number Account (SETNA). The 911 surcharge is established each fall by OES, though current law caps the surcharge at 80 cents.
https://lao.ca.gov/Publications/Report/5145

The applicability of tax increases to the state’s constitutional requirements. [Ballot]

Jan 27, 2026 - The measure requires all tax revenues raised, including those deposited into a special fund, to be counted toward the state ’s minimum funding requirement for schools and community colleges. The Legislature could no longer raise taxes, but deposit those into a special fund, without providing some of the additional revenue to schools and community colleges.
https://lao.ca.gov/BallotAnalysis/Initiative/2025-038

The 2026-27 Budget: California Department of Corrections and Rehabilitation

Feb 23, 2026 - Consistent with court‑ordered plans, the funding will be provided from the fines deposited from the General Fund in prior years into the special deposit fund. As such, there is no additional General Fund impact in the budget year.
https://lao.ca.gov/Publications/Report/5137

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

Feb 20, 2026 - The Governor ’s budget proposes suspending a roughly $3  billion true-up deposit that otherwise would be required in 2025-26. We recommend the Legislature not suspend this deposit. Make a Smaller Withdrawal From the BSA.
https://lao.ca.gov/Publications/Report/5133

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