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

The 2023-24 Budget: Multiyear Assessment

Feb 15, 2023 - In other words, given the volatility in the state ’s revenues, reserves are the state ’s key tool for avoiding cuts to  core  spending. Even With Revenue Declines, Spending Remains Above Historically Recent Peaks.
https://lao.ca.gov/Publications/Report/4687

The 2025-26 Budget: Overview of the Governor's Budget

Jan 13, 2025 - In other words, we are not describing the budget condition as having a surplus or a deficit at this time. These concepts are inherently tools of communication, not accounting, and are ultimately somewhat subjective.
https://lao.ca.gov/Publications/Report/4951

Rethinking California's Reserve Policy

Apr 10, 2025 - In other words, this is our assessment of the reserves that are needed for the state to maintain its core service level over time without cutting core services or raising taxes. Chapter 2: Where Are We Now?
https://lao.ca.gov/Publications/Report/5028

The 2022-23 Budget: Initial Comments on the Governor's May Revision

May 16, 2022 - (In other words, a SAL requirement is the amount of revenue the state is required to allocate in ways that meet its constitutional requirements under Proposition  4.) Specifically, SAL requirements can only be met with: Tax Reductions or Tax Refunds.
https://lao.ca.gov/Publications/Report/4598

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 2022-23 Budget: Fiscal Outlook for Schools and Community Colleges

Nov 17, 2021 - In other words, the General Fund receives the benefit when returns are strong and bears the costs when returns are weak. To the extent that projected district contributions to CalSTRS change in the coming months, they are likely to be somewhat higher than current estimates (as we explain in a separate  post).
https://lao.ca.gov/Publications/Report/4473

The 2024-25 Budget: Proposition 2 Debt Payment Proposals

Mar 20, 2024 - In other words, in some years, the maximum supplemental rate that the CalSTRS Board is able to set for the state in that year is lower than what is actuarially required to eliminate unfunded liabilities by 2046.
https://lao.ca.gov/Publications/Report/4887

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