California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - The added risk variable weighs on the range of revenue outcomes that we view as most plausible. The middle of the range, which becomes our main revenue forecast, is thus lower than if we did not include the stock market risk indicator.
https://lao.ca.gov/Publications/Report/5104

The 2025-26 Budget: Overview of the Spending Plan

Oct 16, 2025 - (In January and May, we had categorized settle up as a spending delay, but upon further deliberation, we view this action as borrowing.) Middle Class Scholarships (MCS) Arrears Budgeting ($1 Billion).
https://lao.ca.gov/Publications/Report/5079

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

Feb 20, 2026 - Any additional resources that materialize at that time should be viewed as a one-time windfall. Despite Revenue Strength, Budget Relies on Reserves and Borrowing. This revenue upgrade comes in addition to already strong revenue growth forecasted in the Governor ’s budget.
https://lao.ca.gov/Publications/Report/5133

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

Nov 15, 2024 - California's Legislative Analyst's Office and the Value of Independence Search In Fiscal Perspectives , the Legislative Analyst periodically offers the Legislature his views on fiscal matters facing California.
https://lao.ca.gov/Publications/Report/4938

The 2025-26 Budget: California's Fiscal Outlook

Nov 20, 2024 - Outside of government and health care, the state has added no jobs in a year and a half. Similarly, the number of Californians who are unemployed is 25  percent higher than during the strong labor markets of 2019 and 2022.
https://lao.ca.gov/Publications/Report/4939

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

Jan 12, 2026 - We view this as roughly balanced —that is, neither a clear surplus nor a clear deficit. That said, it is notable that the budget is in a neutral position even though the administration ’s revenue estimate reflects growth and is up significantly relative to the budget act.
https://lao.ca.gov/Publications/Report/5101

The 2025-26 Budget: Initial Comments on the Governor's May Revision

May 17, 2025 - Finally, although we have not previously recommended the Leg islature take decisive action to address the structural deficits, the state ’s persistent fiscal imbalance and the added downside risks —particularly from potential federal actions —suggest a need for a more proactive approach.
https://lao.ca.gov/Publications/Report/5044

Rethinking California's Reserve Policy

Apr 10, 2025 - Yet we do not view these recommendations as overly cautious —to arrive at these estimates, we have used standard tools from actuaries in pensions and insurance markets. Rather, we view these figures as an honest reflection of the volatility in the state ’s tax system.
https://lao.ca.gov/Publications/Report/5028

The 2023-24 Budget: Overview of the Governor's Budget

Jan 13, 2023 - (That is, in our view, these costs would not have occurred absent legislative action and as a result do not contribute to the budget problem the Legislature faces today.) Comparison to LAO November Outlook.
https://lao.ca.gov/Publications/Report/4662

The Definition of Qualified Capital Outlay for the State Appropriations Limit

Feb 18, 2022 - In this post, we provide our view on some commonly asked questions about the statutory definition of capital outlay for SAL-re lated purposes. Introduction The State Appropriations Limit. The SAL restricts how the state can use revenues that exceed a specified threshold.
https://lao.ca.gov/Publications/Report/4547