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

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

Nov 15, 2024 - Some have asked why this is the case and whether aligning LAO and DOF estimates would be helpful to the Legislature. Although aligning revenue estimates might reduce the potential for confusion, doing so would risk creating bigger problems.
https://lao.ca.gov/Publications/Report/4938

The 2025-26 Budget: Overview of the Spending Plan

Oct 16, 2025 - (Modified versions of Control Sections 90.00 and 90.01 were also added to the 2025 ‑26 Budget Act , extending the availability of these funds. For more on this please see our forthcoming publication, The 2025 ‑26 California Spending Plan: Other Provisions .)
https://lao.ca.gov/Publications/Report/5079

California’s Strong Revenue Trends Mask Looming Budget Risk [Publication Details]

Jan 23, 2026 - In this installment of Fiscal Perspectives, the Legislative Analyst describes how the LAO’s revenue estimates represent a hedge against downside stock market risk and why—despite current cash trends—caution matters given the state’s large, ongoing structural deficit.
https://lao.ca.gov/Publications/Detail/5104

The 2024-25 Budget: Deficit Update

Feb 20, 2024 - Below, we explain why we set forth these amounts as a possible first option to addressing a larger budget problem and then walk through our method for estimating the amounts potentially available in more detail.
https://lao.ca.gov/Publications/Report/4850

The 2025-26 Budget: Undertaking Fiscal Oversight

Feb 24, 2025 - Why Is It Particularly Important Now? State Faces Notable Deficits After 2025-26, Meaning Difficult Choices Are Ahead. Under the Governor ’s January proposals and estimates, the 2025-26 budget is expected to be balanced.
https://lao.ca.gov/Publications/Report/4983

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

Jan 12, 2026 - Budget Solutions Budget solutions are proposals that create more budget capacity. Taken together, the budget solutions in the Governor ’s budget result in an improvement in the budget ’s bottom line by $9  billion.
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 State Appropriations Limit

Apr 21, 2021 - Why Is the SAL a Constraint for the State Now? History of SAL SAL Constrained State Spending in Mid ‑1980s. Figure  3 shows historical calculations of the state ’s limit and appropriations subject to the limit.
https://lao.ca.gov/Publications/Report/4416

Rethinking California's Reserve Policy

Apr 10, 2025 - The nearby box describes why this is our focus. Reserve Policy and the Two Sides of the State Budget State Budget Can Be Thought of in Two Distinct Parts. Functionally, California ’s General Fund budget is divided into two parts: one dedicated to K ‑14 education (about 40  percent of the total) and another part that funds everything else (roughly 60  percent of the total).
https://lao.ca.gov/Publications/Report/5028