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

Feb 20, 2026 - Any additional resources that materialize at that time should be viewed as a one-time windfall. Despite Revenue Strength, Budget Relies on Reserves and Borrowing. This revenue upgrade comes in addition to already strong revenue growth forecasted in the Governor ’s budget.
https://lao.ca.gov/Publications/Report/5133

The 2026-27 Budget: How to Use One-Time Revenue Improvements [Publication Details]

Feb 20, 2026 - The 2026-27 Budget: How to Use One-Time Revenue Improvements [Publication Details] Translate Our Website This Google ™ translation feature provided on the Legislative Analyst's Office (LAO) website is for informational purposes only.
https://lao.ca.gov/Publications/Detail/5133

California's Legislative Analyst's Office and the Value of Independence

Nov 15, 2024 - Although such an office was unprecedented at the time, the LAO ’s existence inspired the creation of similar offices in state governments across the country and, eventually, the Congressional Budget Office in 1974.
https://lao.ca.gov/Publications/Report/4938

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

May 17, 2025 - A budget problem is inherently a point ‑in ‑time estimate that reflects information available at the time of development, forecasts of future revenues and spending, and assumptions about the extent to which changes in costs are due to current policy (that is, whether or not they are “baseline changes ”).
https://lao.ca.gov/Publications/Report/5044

The 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - This Time Might Be Different, but It Is Not Safe to Bet on It. With so much enthusiasm surrounding AI, it now appears time to take seriously the notion that the stock market has become overheated. History suggests that the stock market is prone to overreact to major technological advances, even if the technology itself turns out to be revolutionary.
https://lao.ca.gov/Publications/Report/5091

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

Jan 12, 2026 - This difference provides one‑time savings, giving the state more budget capacity, but if revenues meet expectations for 2025‑26 would eventually require the state to “settle up.” Because the administration does not account for this payment, it would add to a future deficit.
https://lao.ca.gov/Publications/Report/5101

Rethinking California's Reserve Policy

Apr 10, 2025 - Instead, core services will change over time as the state responds to changes in revenues by expanding or contracting the size of government. While a portion of temporary surges in revenue will be allocated to one ‑time spending, after a period of time, the Legislature will begin to expand service levels in response to sustained revenue growth.
https://lao.ca.gov/Publications/Report/5028

Rethinking California's Reserve Policy [Publication Details]

Apr 10, 2025 - Rethinking California's Reserve Policy [Publication Details] HTML Description: Reserves allow the state to ensure stable funding for its services over time, even when revenue fluctuates unpredictably.
https://lao.ca.gov/Publications/Detail/5028