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 2021-22 Budget: Overview of the Governor's Budget

Jan 10, 2021 - However, the 2020 ‑21 budget allocated more than $7  billion in state and federal funds to address COVID-19-related costs and mitigate learning loss. Recent federal legislation —approved shortly before the release of the Governor ’s budget —is likely to provide a similar amount of one-time funding in 2021 ‑22.
https://lao.ca.gov/Publications/Report/4309

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: 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

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

Rethinking California's Reserve Policy

Apr 10, 2025 - Figure  7 shows states ’ rainy day funds as a share of total spending in 2024. On this measure, California ’s reserves rank 29 out of 50. (In fact, Figure  7 likely overstates California ’s reserve balances compared to other states because the data appears to include the SFEU in the state ’s rainy day fund balances, although it is not a true rainy day fund.)
https://lao.ca.gov/Publications/Report/5028

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

Feb 20, 2026 - The Governor ’s budget also maintains a $7  billion withdrawal from the BSA in 2025-26. If a May Revision windfall exceeds the amount needed to fund the true up, we recommend the Legislature use those resources to reduce the size of this withdrawal.
https://lao.ca.gov/Publications/Report/5133

The State Appropriations Limit

Apr 21, 2021 - Overall state population growth has averaged 0. 7  p ercent over the last decade, compared to 1. 3  p ercent in the 1990s. How Might the SAL Limit State Spending Growth? In the Budget Year State Has Diminished Room From 2018 ‑ 19 t o 2021 ‑22.
https://lao.ca.gov/Publications/Report/4416

The 2021-22 Budget: Overview of the Spending Plan (Final Version)

Oct 27, 2021 - Second, the spending plan includes $445. 7 m illion General Fund ($755. 7 m illion total funds) in 2021 ‑ 22 t o fund the Behavioral Health Continuum Infrastructure Program —which will provide grant funding to local entities for behavioral health facilities or mobile crisis infrastructure.
https://lao.ca.gov/Publications/Report/4448

The 2021-22 Budget: The Governor’s Suspension Proposal

Jan 29, 2021 - Under its own revenue forecast, assuming the suspensions were operative, the administration estimates operating deficits would grow from $7. 6  b illion in 2022 ‑ 23 t o $11. 3  b illion in 2024 ‑25.
https://lao.ca.gov/Publications/Report/4328