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 2024-25 Budget: Overview of the Governor's Budget

Jan 13, 2024 - Specifically, we suggest the Legislature: (1) plan for lower revenues, (2) maintain a similar reserve withdrawal, (3) develop a plan for school and community college funding, (4) maximize reductions in one ‑time spending, and (5) apply a higher bar for any discretionary proposals and contain ongoing service level.
https://lao.ca.gov/Publications/Report/4825

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. Figure  3 provides our estimates of the General Fund condition, including our estimate of the budget problem.
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 - For example, the simultaneous occurrence of very low unemployment (below 4  percent) and high inflation (above 4  percent) has, for the past 70 years, always preceded a recession within two years. Although inflation, as measured by the consumer price index, appears to be trending down from the recent peak of 9.1  percent in June 2022, as of March, it remained 5  percent, or 2.5 times the Federal Reserve ’s (the Fed ’s) target.
https://lao.ca.gov/Publications/Report/4762

The 2023-24 Budget: Overview of the Spending Plan (Final Version)

Oct 16, 2023 - The 2023-24 Budget: Overview of the Spending Plan (Final Version) Overview of the Spending Plan (Final Version) Appendix 4: Large One-Time and Temporary Augmentations Transportation Appendix 4, Figure 1 Remaining Large One ‑Time and Temporary Augmentations From the 2021 ‑22 and 2022 ‑23 Budget Packages: Business and Labor General Fund (In millions) Begin new
https://lao.ca.gov/Publications/Report/4788/4

The 2024-25 Budget: Deficit Update

Feb 20, 2024 - The 2024-25 Budget: Deficit Update Deficit Update Under LAO Revenue Update, Budget Problem Grows by $15  Billion The state already faces a significant deficit this year — we estimate it totaled $58 billion under the administration’s revenue forecast at the time the Governor’s budget was proposed in January.
https://lao.ca.gov/Publications/Report/4850

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

The 2024-25 Budget: Initial Comments on the Governor’s May Revision

May 17, 2024 - In January, we estimated that the budget problem under the administration ’s assumptions was $58  billion. The budget problem is now slightly lower —$55  billion. There are four notable factors contributing to this difference.
https://lao.ca.gov/Publications/Report/4902

The 2023-24 Budget: Overview of the Spending Plan (Final Version)

Oct 16, 2023 - It also includes Chapter  58 of 2023 (S B  146 , Gonzalez), which authorizes the use of two project delivery methods —progressive design ‑build and job order contracting —under certain circumstances.
https://lao.ca.gov/Publications/Report/4788

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