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

The 2022-23 Budget: Multiyear Budget Outlook

May 24, 2022 - However, under our estimates, the SFEU would remain positive throughout the period, which signals the budget is barely balanced under these assumptions. These findings are quite similar to the Department of Finance’s ( DOF’s) estimates .
https://lao.ca.gov/Publications/Report/4602

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

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

Jan 13, 2025 - The Governor has signaled interest in changing the state ’s reserve policy by: (1)  increasing the cap on BSA required deposits from 10  percent of General Fund taxes to 20  percent of General Fund taxes, and (2)  excluding the state ’s reserve deposits from the state appropriations limit.
https://lao.ca.gov/Publications/Report/4951

The 2023-24 Budget: Multiyear Assessment

Feb 15, 2023 - This signals that lawmakers have committed to an ongoing spending level that is sustainable —that is, in line with core spending —but spending above that base is less so. Using Reserves Now Would Maintain Spending Peak, but Eliminate a Tool for Future Shortfalls.
https://lao.ca.gov/Publications/Report/4687

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

Despite Fiscal Forecasting Uncertainties, Multiyear Budget Planning Essential

May 27, 2021 - Building on these policy-related benefits, another reason for regularly preparing multiyear fiscal estimates is that doing so sends a reassuring signal to financial markets and the state ’s creditors.
https://lao.ca.gov/Publications/Report/4443

Strong Tax Collections Belie California's Challenging Fiscal Outlook

Apr 26, 2022 - Treasury notes in particular, recently have signaled as much. In normal economic times, there is a positive spread between the yields on ten-year and two-year notes. When this gap shrinks or inverts, however, it suggests bond investors anticipate that in the future, the Fed will be holding interest rates low due to a weaker economy.
https://lao.ca.gov/Publications/Report/4590

Rethinking California's Reserve Policy

Apr 10, 2025 - In light of these developments, the Legislature has signaled an interest in making changes to the state ’s reserve policy. In addition, through this year ’s budget process, the Governor has proposed two changes to the state ’s rainy day fund that, if passed by the Legislature, would go before voters.
https://lao.ca.gov/Publications/Report/5028