California’s Strong Revenue Trends Mask Looming Budget Risk

Jan 23, 2026 - To do this, we add a stock market indicator to our forecast models alongside other the economic variables. The added risk variable weighs on the range of revenue outcomes that we view as most plausible.
https://lao.ca.gov/Publications/Report/5104

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

Rethinking California's Reserve Policy

Apr 10, 2025 - That said, both the Legislature and voters have indicated, through various policies enacted over the last decade, that their preference is to address these risks not by reforming the revenue structure, but by building reserves.
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: California's Fiscal Outlook

Nov 20, 2024 - Similarly, the number of Californians who are unemployed is 25  percent higher than during the strong labor markets of 2019 and 2022. Consumer spending (measured by inflation ‑adjusted retail sales and taxable sales) has continued to decline throughout  2024.
https://lao.ca.gov/Publications/Report/4939

The State Appropriations Limit

Apr 21, 2021 - The state ’s appropriations subject to the limit fell substantially during the dot ‑com bust in the early 2000s and again during the Great Recession due to the significant decline in state revenues during those downturns.
https://lao.ca.gov/Publications/Report/4416

The 2025-26 Budget: Overview of the Spending Plan

Oct 16, 2025 - DOF has not yet received official claims from all affected local governments, but early estimates indicate expenditures for these purposes could be around $200  million across the 2024 ‑25 and 2025 ‑26 budget years.
https://lao.ca.gov/Publications/Report/5079

The 2021-22 Spending Plan: Other Provisions

Sep 23, 2021 - To be eligible, a firm ’s gross receipts must have dropped by at least 20  percent from 2019 to 2020. Firms that file taxes on a fiscal year basis must have incurred a decline of 20  percent or more in 2018 ‑19 as compared to either (1)  2019 ‑20 or (2)  the average of 2019 ‑20 and 2020 ‑21.
https://lao.ca.gov/Publications/Report/4452

The 2025-26 Budget: Undertaking Fiscal Oversight

Feb 24, 2025 - In presenting the Governor’s budget, the administration indicated such proposals would be forthcoming in May. What Is Fiscal Oversight? Fiscal Oversight Provides Insight Into the Benefits and Costs of State Programs.
https://lao.ca.gov/Publications/Report/4983