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 - During the special session, the Legislature added Control Sections 90.00 and 90.01 to the 2024 ‑25 Budget Act providing up to $2.5  billion one ‑time for response and recovery costs related to the January 2025 Southern California wildfires.
https://lao.ca.gov/Publications/Report/5079

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

Nov 15, 2024 - As such, our independent fiscal assessment underlies the Legislature ’s ability to assert an informed check on the executive branch, making any added complexity from diverging estimates a worthwhile trade-off.
https://lao.ca.gov/Publications/Report/4938

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

Apr 19, 2023 - Recent stress in the banking sector illustrates the point and even if the turmoil largely has subsided, these events could potentially contribute to more constrained credit conditions. In addition to gauging the risk of recession, the type of recession that could unfold, if there is one, will matter.
https://lao.ca.gov/Publications/Report/4762

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

The 2021-22 Spending Plan: Other Provisions

Sep 23, 2021 - In September 2020, the Legislature instituted the Main Street Small Business Tax Credit, which provides income or sales tax credits to firms with 100 or fewer employees that added jobs in the second half of 2020.
https://lao.ca.gov/Publications/Report/4452

The 2023-24 Budget: Multiyear Assessment

Feb 15, 2023 - Using reserves now to maintain the recent spending peak would mean the state would have less reserves available to pay for its core services if revenues declined further or in the event of a recession.
https://lao.ca.gov/Publications/Report/4687

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

May 17, 2024 - The Safety Net Reserve was designed to help cover costs of increasing caseload in Medi-Cal and the California Work Opportunity and Responsibility to Kids program in the event of an economic downturn.
https://lao.ca.gov/Publications/Report/4902

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

Jan 13, 2024 - The Safety Net Reserve was designed to help cover costs of increasing caseload in Medi‑Cal and the California Work Opportunity and Responsibility to Kids (CalWORKs) program in the event of an economic downturn.
https://lao.ca.gov/Publications/Report/4825