California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - After the dot-com bust and the Great Recession, it took four and five years, respectively, for revenues to recover. Incorporating revenue risk into the budget now, therefore, reflects prudence, not pessimism.
https://lao.ca.gov/Publications/Report/5104

The 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - For California, the dot ‑com era —when stocks rose and then fell precipitously in response to widespread adoption of the internet —offers the most salient example. The internet has proven to be a transformative technology and, yet, the stock market ’s initial reaction was clearly overly exuberant.
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

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 2023-24 Budget: Multiyear Assessment

Feb 15, 2023 - Three of those —the recession in the early 1990s, the dot ‑com bust in the early 2000s, and the Great Recession —resulted in large revenue shortfalls and ensuing multiyear deficits, even for some years after each recession ended.
https://lao.ca.gov/Publications/Report/4687

The 2025-26 Budget: Undertaking Fiscal Oversight

Feb 24, 2025 - In contrast, oversight of Medi-Cal likely requires discrete examinations of factors like eligibility, caseload, services, and utilization to understand the program benefits. For instance, California Advancing and Innovating Medi-Cal, a recent initiative to test new ways of delivering services, could be a focus of Medi -Cal oversight.
https://lao.ca.gov/Publications/Report/4983

The 2022-23 Budget: Fiscal Outlook for Schools and Community Colleges

Nov 17, 2021 - Our office has released several reports examining the effects of climate change, including sea level rise, increasing temperatures, and more frequent and severe wildfires. School and community college districts own and operate more than 10,000 facilities across the state that could be affected.
https://lao.ca.gov/Publications/Report/4473

The 2022-23 Budget: State Appropriations Limit Implications

Mar 30, 2022 - For this analysis we examined 10,000 possible revenue and economic scenarios. In over 95  percent of scenarios, the state faces a budget problem by 2025 ‑26 either due to constitutional spending requirements or a recession.
https://lao.ca.gov/Publications/Report/4583

New Inflation Poses Not So New Budget Risk

Dec 15, 2022 - In addition, with the inflationary conditions in mind, we undertook a separate analysis examining how high inflation interacts with various types of state budget expenditures. These analyses allow us to evaluate two key questions that come to mind in light of the current period of high inflation.
https://lao.ca.gov/Publications/Report/4653

The 2023-24 Budget: Considering Inflation's Effects on State Programs

Nov 16, 2022 - This brief takes a case study approach to examine how elevated inflation has already impacted—and could continue to impact—state spending programs. Consequently, while this analysis covers a large share of the budget, it is not comprehensive.
https://lao.ca.gov/Publications/Report/4647