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

Rethinking California's Reserve Policy

Apr 10, 2025 - This raises an important question: Are these changes sufficient? That is, how much does the state need to save in reserves to maintain its core services during future downturns and would the Governor ’s proposal achieve that goal?
https://lao.ca.gov/Publications/Report/5028

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

The Definition of Qualified Capital Outlay for the State Appropriations Limit

Feb 18, 2022 - While some new proposals and existing spending meet this threshold without question, there are other more ambiguous cases. In this post, we provide our view on some commonly asked questions about interpreting this provision.
https://lao.ca.gov/Publications/Report/4547

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

May 17, 2025 - Finally, although we have not previously recommended the Leg islature take decisive action to address the structural deficits, the state ’s persistent fiscal imbalance and the added downside risks —particularly from potential federal actions —suggest a need for a more proactive approach.
https://lao.ca.gov/Publications/Report/5044

The 2025-26 Budget: Undertaking Fiscal Oversight

Feb 24, 2025 - This section offers some questions to determine how to focus those efforts. What Is the Distribution of General Fund Commitments? Figure  1 shows the relative size and expected growth rates of major General Fund programs.
https://lao.ca.gov/Publications/Report/4983

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

Flexible Funding to California in the American Rescue Plan

Mar 23, 2021 - Common Questions About the Fiscal Relief Funds We expect the U.S. Department of Treasury (Treasury) to release guidance in the coming weeks with more specifics on how the federal administration interprets the statutory language in the ARP.
https://lao.ca.gov/Publications/Report/4407