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 - Balance of the State ’s Outstanding Budgetary Borrowing Has Increased. The actions described in this section increase the amount of outstanding borrowing the state has used to address its budget problems.
https://lao.ca.gov/Publications/Report/5079

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

Feb 20, 2026 - Under the state’s constitutional budget formulas, a revenue increase of this magnitude would translate, very roughly, into a $2.5 billion improvement in the budget bottom line. Given the recent forecasting differences between our office and the administration, there is a good chance the administration’s revenue upgrade at May Revision will be larger than our current estimate.
https://lao.ca.gov/Publications/Report/5133

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

Jan 12, 2026 - Among these, some of the largest drivers of increased costs include Medi‑Cal, debt service on general obligation bonds, and employee compensation. This increases the administration’s estimate of the deficit relative to our forecast, partially offsetting some of the revenue improvement.
https://lao.ca.gov/Publications/Report/5101

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: 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

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 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - We advise the Legislature to address the budget problem through a combination of ongoing solutions —namely , achievable spending reductions and/or revenue increases. There are three reasons these actions are now critical.
https://lao.ca.gov/Publications/Report/5091

The 2025-26 Budget: Multiyear Budget Outlook

May 24, 2025 - The Legislature likely will need to adopt additional solutions that increase ongoing revenues or reduce ongoing spending —both of which involve the most difficult and consequential trade-offs for policy makers.
https://lao.ca.gov/Publications/Report/5052

Rethinking California's Reserve Policy

Apr 10, 2025 - That is, if the state were to raise the reserve cap to 20  percent and also increase annual deposits —for example, by increasing the base amount —it would not result in a substantial improvement in the benchmark scenario.
https://lao.ca.gov/Publications/Report/5028