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 - However, our Fiscal Outlook revenue forecast, shown in Figure  2 , reflects a smaller, temporary upgrade which reverses beginning in 2026 ‑ 27 —resulting in 2026 ‑27 revenues being in line with budget act estimates.
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 - 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 2024-25 Budget: Proposition 2 Debt Payment Proposals

Mar 20, 2024 - The state ’s repayments on this borrowing plan, although not technically pension payments, are also considered eligible for Proposition  2 requirements. (For more information about this debt, see: The 2017‑18 Budget: The Governor’s CalPERS Borrowing Proposal and The 2018‑19 Budget: Repaying the CalPERS Borrowing Plan .)
https://lao.ca.gov/Publications/Report/4887

Rethinking California's Reserve Policy

Apr 10, 2025 - How Does Proposition   2 Help the State Build Reserves? Figure  4 shows how Proposition  2 deposit rules work. The measure has two main parts. First, it requires the state to set aside 1.5 percent of total General Fund revenues (we refer to this as the “base amount”).
https://lao.ca.gov/Publications/Report/5028

The State Appropriations Limit

Apr 21, 2021 - Proposition  2 (201 4) r equired the state to set aside more funds in reserves. Under Proposition  4, reserve deposits are counted in the year they are made (instead of the year they are withdrawn). While Proposition   2 r equires the state to set aside minimum amounts in reserve each year, Proposition   4 l
https://lao.ca.gov/Publications/Report/4416

The 2021-22 Budget: The Governor’s Proposition 2 Proposals

Apr 26, 2021 - (We provide additional background and detail on the remaining eligible uses of Proposition  2 here .) Figure 4 Outstanding State ‑Only Eligible Uses of Proposition 2 (In Billions)
https://lao.ca.gov/Publications/Report/4418

The 2023-24 Budget: Multiyear Assessment

Feb 15, 2023 - In particular, the Legislature could consider: (1)  suspending deposits into the state ’s rainy ‑day fund (although this would require action by the Governor); (2)  reducing more one ‑time and temporary  spending; (3)  shifting more costs than currently proposed by the Governor; and/or (4)  increasing revenues, for example, on a temporary basis.
https://lao.ca.gov/Publications/Report/4687

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

Jan 12, 2026 - Some of the largest spending augmentations proposed for the budget window include: (1) $76 million for utility replacement and site improvements at Exposition Park, (2) $67 million to the California Department of Forestry and Fire Protection for fixed‑wing aircraft pilot and mechanics contract increases, (3) $60 million to the Department of Health Care Access and Information for
https://lao.ca.gov/Publications/Report/5101

The 2025-26 Budget: Overview of the Spending Plan

Oct 16, 2025 - Second, these higher revenues are more than offset by more discretionary spending, which totals $4  billion in the final package, compared to $1.6  billion in the May Revision. (The difference between these two —over $2   billion —increases the budget problem.)
https://lao.ca.gov/Publications/Report/5079