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: Multiyear Budget Outlook

May 23, 2024 - Between 2024 ‑25 and 2027 ‑27, HHS programs grow at an average annual rate of 5.1  percent under our projections, compared to 8  percent under the administration ’s estimates. As we have commented in the past, our office has little insight into the components of, or assumptions underlying, the administration ’s projections in HHS.
https://lao.ca.gov/Publications/Report/4907

The 2024-25 Budget: Deficit Update

Feb 20, 2024 - After setting aside disbursements and Governor ’s budget proposals, we estimate the state possibly could pull back and reduce one-time and temporary augmentations by as much as $6.4  billion in 2023 ‑24, $4.1  billion in 2024 ‑25, and $5.1  billion in 2025 ‑26.
https://lao.ca.gov/Publications/Report/4850

The 2023-24 Budget: Initial Comments on the Governor's May Revision

May 15, 2023 - . $5.1 Billion in Reductions. We define a spending reduction as the elimination of an augmentation previously approved under current law or policy. The May Revision includes $5.1 billion in reductions, the largest of which is withdrawing a discretionary principal payment on state’s unemployment insurance loan (which otherwise is paid by employers’ payroll taxes).
https://lao.ca.gov/Publications/Report/4769

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

May 16, 2022 - Governor Also Allocates $5.1   Billion Within K ‑14 Education Surplus for SAL ‑Excluded Spending. In addition to the $35  billion in SAL exclusions that use the overall General Fund surplus, the Governor proposes using $5.1  billion from the surplus within the school and community college budget for SAL ‑excluded purposes.
https://lao.ca.gov/Publications/Report/4598

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

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

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 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

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