California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - The Internet obviously has been a transformative innovation for society and the economy, but early on, financial markets valued dot-com and Internet firms above what their revenue-generating capacity warranted at the time.
https://lao.ca.gov/Publications/Report/5104

The 2026-27 Budget: Overview of the Governor's Budget [Publication Details]

Jan 12, 2026 - On January 9, 2026, Governor Newsom’s administration presented its proposed state budget to the California Legislature. In this report, we provide a high-level summary and our initial analysis of the Governor’s budget based on our preliminary review (as of January 10). Assembly Budget Handout (PDF) Senate Budget and Fiscal Review Handout (PDF)
https://lao.ca.gov/Publications/Detail/5101

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

Jan 12, 2026 - (We consider a proposal to be “discretionary” if it provides more funding for a program or a service above what is already committed under current law or policy.) After 2026‑27, these proposals would add about $200 million in ongoing spending.
https://lao.ca.gov/Publications/Report/5101

The 2025-26 Budget: California Spending Plan Series [Publication Details]

Oct 16, 2025 - Each year, our office publishes California Spending Plan, a series of publications that summarize the annual state budget. The flagship report of this series, Overview of the Spending Plan, is presented here along with short online posts that focus on major areas and features of the 2025-26 budget package. As the posts become available, we will add them below.
https://lao.ca.gov/Publications/Detail/5105

The 2026-27 Budget: California's Fiscal Outlook

Nov 19, 2025 - This  is not a prediction of what will happen —state and federal laws and policies will change in the coming years —but rather serves as a baseline to help the Legislature understand its starting place.
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 - In his 2021 book, The Resilient Society , Princeton University economist Markus Brunnermeier argues that for governments, being frugal in good times is what provides extra spending capacity —resilience —in bad times.
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 - What Is Fiscal Oversight? Fiscal Oversight Provides Insight Into the Benefits and Costs of State Programs. As the state ’s primary policymaking body and stewards of public resources, the Legislature regularly undertakes oversight of the state ’s programs.
https://lao.ca.gov/Publications/Report/4983

The 2025-26 Budget: Overview of the Spending Plan

Oct 16, 2025 - What Is a Budget Problem? A budget problem —also called a deficit —arises when resources for the upcoming budget are insufficient to cover the costs of currently authorized services. A budget problem is inherently a point ‑in ‑time estimate that reflects information available at the time of development, forecasts of future revenues and spending, and assumptions about which cost changes reflect current law and policy (referred to as “baseline changes ”).
https://lao.ca.gov/Publications/Report/5079