California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - After the dot-com bust and the Great Recession, it took four and five years, respectively, for revenues to recover. Incorporating revenue risk into the budget now, therefore, reflects prudence, not pessimism.
https://lao.ca.gov/Publications/Report/5104

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

Feb 20, 2026 - Alternatively, or in combination with the above actions, the Legislature could use windfall resources to repay budgetary borrowing undertaken in recent budgets. Although the state faces significant cost pressures due to reductions in federal funding, using one-time resources to backfill those ongoing reductions would put the state on even worse fiscal footing going forward.
https://lao.ca.gov/Publications/Report/5133

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

Jan 12, 2026 - However, the Governor ’s budget does not include material actions to address either challenge. In this report, we offer an alternative approach for the Legislature to take that would put the state on better fiscal footing.
https://lao.ca.gov/Publications/Report/5101