California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - Throughout the mid-to-late 1990s, the stock market boomed over optimism around the Internet and dot-com start-ups. Strong tax revenue trends from this boom generated large budget surpluses that ultimately gave way to serious deficits once the bubble burst and PIT revenues declined nearly 30  percent.
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

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 - Setting aside all capital gains revenues would increase the state ’s spending on both debt payments and reserve deposits before 2029 ‑30. After 2029 ‑30, the Legislature could choose to dedicate all of these requirements to reserves.
https://lao.ca.gov/Publications/Report/5028

The 2026-27 Budget: How to Use One-Time Revenue Improvements

Feb 20, 2026 - In addition, recent budgets have relied on nearly $30  billion in borrowing to address deficits, and the Governor ’s budget proposes almost $6  billion in additional borrowing (see Figure  1). A period of strong revenue growth is not an appropriate time to draw down significant reserves or continue to rely on borrowing.
https://lao.ca.gov/Publications/Report/5133

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

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

Jan 12, 2026 - As such, the administration ’s revenue estimate exceeds ours by almost $30  billion across the budget window (2024 ‑25 through 2026 ‑27). This  higher revenue assumption substantially improves the budget condition relative to our forecast and is the main driving difference between our estimates of the deficit.
https://lao.ca.gov/Publications/Report/5101

The 2025-26 Budget: Overview of the Spending Plan

Oct 16, 2025 - As of June 30, 2025, $335.9  million exclusively from the General Fund had been allocated through the control sections by DOF for these purposes. After the special session, the sections were amended to allow funds to be used to reimburse local governments through June 2026 for (1)  unmet response and recovery costs, and (2)  lost property tax revenue.
https://lao.ca.gov/Publications/Report/5079

The State Appropriations Limit

Apr 21, 2021 - In particular, Proposition  30  (201 2) i ncreased —and Proposition  55 (201 6) e xtended —the top marginal rates for the personal income tax, thereby resulting in more state collections from capital gains.
https://lao.ca.gov/Publications/Report/4416

The 2024-25 California Spending Plan: Other Provisions

Oct 2, 2024 - Assembly Bill 107 requires CPUC, no later than 30 days after NTIA authorizes the award of BEAD program funds, to notify legislative staff of any award conditions placed on the funds by the NTIA, and of any NTIA-required modifications to state-administered BEAD program processes.
https://lao.ca.gov/Publications/Report/4934