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: California's Fiscal Outlook

Nov 20, 2024 - Outside of government and health care, the state has added no jobs in a year and a half. Similarly, the number of Californians who are unemployed is 25  percent higher than during the strong labor markets of 2019 and 2022.
https://lao.ca.gov/Publications/Report/4939

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 2025-26 Budget: Initial Comments on the Governor's May Revision

May 17, 2025 - Revenues for prior and current years are up a total of $6  billion, primarily reflecting stronger ‑than ‑expect personal income tax collections which are running $4  billion ahead of prior projections as of April.
https://lao.ca.gov/Publications/Report/5044

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

Rethinking California's Reserve Policy

Apr 10, 2025 - Conversely, revenues can grow quickly in response to economic expansions or run ups in the stock market. …And Core Spending Is Not. Meanwhile, the ongoing costs of state programs —the state ’s core service level —is much steadier.
https://lao.ca.gov/Publications/Report/5028

The 2024-25 Budget: Overview of the Governor's Budget

Jan 13, 2024 - Overall, the Governor ’s budget runs the risk of understating the degree of fiscal pressure facing the state in the future. The Legislature likely will face more difficult choices next year. To mitigate these challenges, we recommend the Legislature develop this year ’s budget with a focus on future years.
https://lao.ca.gov/Publications/Report/4825

New Inflation Poses Not So New Budget Risk

Dec 15, 2022 - Second, fiscal policy is most likely to be inflationary when governments run budget deficits. When deficits occur, the government is spending more into the economy than it is taking out via taxation.
https://lao.ca.gov/Publications/Report/4653

The 2021-22 California Spending Plan: The State Appropriations Limit

Aug 30, 2021 - The 2021-22 California Spending Plan: The State Appropriations Limit The 2021-22 California Spending Plan The State Appropriations Limit In the late 1970s, voters passed Proposition  4 (1979), which added Article XIIIB to the State Constitution.
https://lao.ca.gov/Publications/Report/4449

The State Appropriations Limit

Apr 21, 2021 - Over the longer term, however, the state could still run out of room. As our analysis in Figure   5 i ndicated, there is about a 60  p ercent chance the state will have more than $ 15  b illion in annual excess revenues by 2024 ‑25.
https://lao.ca.gov/Publications/Report/4416