California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - This differs from the approach taken by the Governor. While the Governor ’s budget describes the financial markets as a leading risk to the budget and assumes that stock market appreciation slows, it does not explicitly factor the risk of a market downturn into its revenue estimates.
https://lao.ca.gov/Publications/Report/5104

The 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - The state solved a $27  billion deficit in 2023 ‑24, a $55  billion deficit in 2024 ‑25, and a $15  billion deficit in 2025 ‑26 (in addition to roughly $28  billion in proactive budget ‑balancing actions taken the year before).
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

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

Jan 12, 2026 - Taken together, the budget solutions in the Governor ’s budget result in an improvement in the budget ’s bottom line by $9  billion. Ongoing, the Governor ’s spending ‑related solutions provide $5  billion in savings within a few years.
https://lao.ca.gov/Publications/Report/5101

The 2023-24 Budget: Multiyear Assessment

Feb 15, 2023 - Rather, revenues have declined relative to their recent peaks due to Federal Reserve actions taken to cool an overheated economy. We do, however, think there is a heightened risk of this cooldown progressing to a recession.
https://lao.ca.gov/Publications/Report/4687

The 2025-26 Budget: Overview of the Spending Plan

Oct 16, 2025 - All figures in this publication reflect the administration ’s estimates of actions taken through early July 2025, however, we have updated the text to reflect actions taken later in the legislative session.
https://lao.ca.gov/Publications/Report/5079

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 2025-26 Budget: Overview of the Governor's Budget

Jan 13, 2025 - Moreover, specific budgetary conditions occurring this year —including legislative action taken last year to withdraw more in reserves this year —make interpretation of the budget position more complex.
https://lao.ca.gov/Publications/Report/4951

The 2024-25 California Spending Plan: Other Provisions

Oct 2, 2024 - We identify some of the major actions taken in the 2024-25 budget process below. General Fund Reductions. The budget reflects $14.5  million in General Fund reductions in 2024-25 (declining to $1.6  million in 2027-28 and ongoing).
https://lao.ca.gov/Publications/Report/4934

The 2024-25 California Spending Plan: Other Provisions

Oct 2, 2024 - We identify some of the major actions taken in the 2024-25 budget process below. General Fund Reductions. The budget reflects $14.5  million in General Fund reductions in 2024-25 (declining to $1.6  million in 2027-28 and ongoing).
https://lao.ca.gov/Publications/Report/4934/governors-office-of-emergency-services