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: California's Fiscal Outlook

Nov 19, 2025 - This is about $5  billion larger than the budget problem anticipated by the administration in June,  despite improvements in revenue. This is because constitutional spending requirements under Proposition  98 (1988) and Proposition  2 (2014) almost entirely offset revenue gains.
https://lao.ca.gov/Publications/Report/5091

Whether or Not to Tap Reserves to Solve Estimated Budget Problem Emerges as Key Fiscal Decision Facing California’s Legislature

Apr 19, 2023 - Other downturns, such as the 2001 so-called dot-com recession, had severe fiscal implications while inflicting somewhat milder economic damage. The 2008 Great Recession had brutal effects on both the state ’s economy and budget.
https://lao.ca.gov/Publications/Report/4762

The 2024-25 Budget: Proposition 2 Debt Payment Proposals

Mar 20, 2024 - Proposition 2 Proposition   2 Contains Annual Debt Payment Requirement. Proposition  2 created new rules regarding: (1)  deposits into the state ’s rainy ‑day fund and (2)  accelerating payments toward certain eligible debts.
https://lao.ca.gov/Publications/Report/4887

The 2021-22 Budget: The Governor’s Proposition 2 Proposals

Apr 26, 2021 - The 2021-22 Budget: The Governor’s Proposition 2 Proposals The Governor ’s Proposition  2 Proposals Introduction Passed by voters in 2014, Proposition  2 changed budgeting practices concerning: (1)  reserves and (2)  debt payments.
https://lao.ca.gov/Publications/Report/4418

Rethinking California's Reserve Policy

Apr 10, 2025 - We find that, under current law, the reserves built under Proposition 2 allow the state to cover about one‑third of funding shortfalls (see Figure 5). Put another way, if Proposition 2 remained in place as is for the next 50 years, in the benchmark scenario, the state would be able to cover about one‑third of funding shortfalls such that cuts to core services and/or tax increases would often be necessary.
https://lao.ca.gov/Publications/Report/5028

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

Jan 12, 2026 - Ongoing, the Governor ’s spending ‑related solutions provide $5  billion in savings within a few years. Appendix 1 provides a list of the Governor ’s budget solutions. Generates $5.6 Billion School and Community College Settle‑Up Obligation in 2025‑26.
https://lao.ca.gov/Publications/Report/5101

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

Feb 20, 2026 - Our recent revenue post suggests an improvement in revenues of around $5 billion relative to the Governor’s budget estimates. Under the state’s constitutional budget formulas, a revenue increase of this magnitude would translate, very roughly, into a $2.5 billion improvement in the budget bottom line.
https://lao.ca.gov/Publications/Report/5133

The 2023-24 Budget: Multiyear Assessment

Feb 15, 2023 - Three of those —the recession in the early 1990s, the dot ‑com bust in the early 2000s, and the Great Recession —resulted in large revenue shortfalls and ensuing multiyear deficits, even for some years after each recession ended.
https://lao.ca.gov/Publications/Report/4687

The 2025-26 Budget: Overview of the Spending Plan

Oct 16, 2025 - Figure 2 The State ’s New Wall of Debt (In Billions)
https://lao.ca.gov/Publications/Report/5079