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 - 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

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 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

Despite Fiscal Forecasting Uncertainties, Multiyear Budget Planning Essential

May 27, 2021 - What do the new multiyear estimates tell us? For one, they suggest the Governor ’s emphasis on one-time spending is appropriate. Of the large $38 billion discretionary surplus at the May Revision, we estimate that the Governor initially would allocate just $2 billion for new ongoing purposes.
https://lao.ca.gov/Publications/Report/4443

New Inflation Poses Not So New Budget Risk

Dec 15, 2022 - These analyses allow us to evaluate two key questions that come to mind in light of the current period of high inflation. First, what is the main channel through which high inflation affects the state’s budget condition?
https://lao.ca.gov/Publications/Report/4653

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 2023-24 Budget: California's Fiscal Outlook

Nov 16, 2022 - For example, it requires us to project how caseload will change for means ‑tested programs, estimate how much federal funding will come to the state based on current federal policy, and make many other assessments.
https://lao.ca.gov/Publications/Report/4646

The 2021-22 Budget: Overview of the Governor's Budget

Jan 10, 2021 - To date, the administration has not provided us with the details of this proposal. Early Action Proposals. The Governor proposes over a dozen proposals costing $7.8  billion that he is asking the Legislature to pass in the early spring.
https://lao.ca.gov/Publications/Report/4309

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