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 - For California, the dot ‑com era —when stocks rose and then fell precipitously in response to widespread adoption of the internet —offers the most salient example. The internet has proven to be a transformative technology and, yet, the stock market ’s initial reaction was clearly overly exuberant.
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 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

Rethinking California's Reserve Policy

Apr 10, 2025 - In March of 2004, on the heels of the dot ‑com bust, voters passed Proposition  58, which created the Budget Stabilization Account (BSA). In the 2006 ‑07 budget, the Legislature deposited $472  million into the BSA and in 2007 ‑08 deposited $1.5  billion.
https://lao.ca.gov/Publications/Report/5028

Flexible Funding to California in the American Rescue Plan

Mar 23, 2021 - The state is not expected to experience a reduction in General Fund revenue in 2020-21 or 2021-22 compared to 2018-19 (the baseline revenue year in the ARP). Specifically, General Fund revenues (excluding constitutional reserve deposits) were $143  billion in 2018-19, while comparable revenues for 2020-21 and 2021-22 currently are estimated to be $158  billion and $161  billion, respectively.
https://lao.ca.gov/Publications/Report/4407

New Inflation Poses Not So New Budget Risk

Dec 15, 2022 - Not long after, however, in the wake of the COVID-19 pandemic, inflation trends and the Fed ’s orientation to them began to reverse. Once it emerged, inflation accelerated throughout 2021 and has remained elevated this year with as yet indeterminate signs of abating.
https://lao.ca.gov/Publications/Report/4653

The State Appropriations Limit

Apr 21, 2021 - The state ’s appropriations subject to the limit fell substantially during the dot ‑com bust in the early 2000s and again during the Great Recession due to the significant decline in state revenues during those downturns.
https://lao.ca.gov/Publications/Report/4416

California's Legislative Analyst's Office and the Value of Independence

Nov 15, 2024 - Consider as evidence that in just the last several years —during and after the COVID-19 pandemic —consensus macroeconomic forecasts have been wildly off from actual outcomes. But adopting a budget requires a specific revenue estimate, so what to do?
https://lao.ca.gov/Publications/Report/4938

The 2022-23 California Spending Plan: Other Provisions

Sep 27, 2022 - The budget extends the state ’s COVID-19 sick leave policy by three months, from September 30, 2022 to December 31, 2022. The state ’s COVID-19 sick leave policy requires employers to provide workers up to 40 hours of sick leave to use if (1)  under COVID-19 isolation, (2)  attending a vaccine appointment, or (3)  experiencing COVID-19 symptoms.
https://lao.ca.gov/Publications/Report/4626